Cash Reserve Ratio (CRR) meaning, implication on Economy Explained
What is CRR? CRR means Cash Reserve Ratio. Banks in India are required to hold a certain proportion of their total deposits with RBI in cash form. Right now, CRR is about 4.75% that means if people deposit total Rs.100 in SBI, then SBI would have to deposit Rs.4.75 in RBI. This is CRR or Cash Reserve Ratio. CRR rule doesnot apply to Non Banking Financial Companies (NBFC), Mutual funds or insurance companies. What is Scheduled Commercial Bank? Scheduled banks are those banks which have been included in the second schedule of the Reserve bank of India act of 1934. The banks included in this schedule list should fulfill two conditions. The paid capital and collected funds of bank should not be less than Rs. 5 lakhs . Any activity of the bank will not adversely affect the interests of depositors [ hahaha, does it mean Non-scheduled banks are allowed to adversely affect the interests of depositors !? ] Examples of Scheduled Commercial Banks Public Sector Private Sector Majority of sta