ADVANTAGES AND DISADVANTAGES OF CASH RESERVE RATIO (CRR) IN BANKING - BANKING TERMS FOR EXAMS
In the intricate web of banking terminologies, one term that often takes center stage is the Cash Reserve Ratio (CRR). Understanding CRR is like deciphering a code to the inner workings of a country's monetary policy and its impact on the banking system. In this comprehensive guide, we'll delve into the depths of CRR, unraveling its significance, calculation, and implications. What is Cash Reserve Ratio (CRR)? At its core, Cash Reserve Ratio is a percentage of a bank's total deposits that it is mandated to keep with the central bank of the country, in this case, the Reserve Bank of India (RBI). This reserve is maintained in the form of liquid cash, and the primary objective is to ensure the financial stability of the banking system. The Regulatory Authority: Reserve Bank of India (RBI) The Reserve Bank of India, as the country's central banking institution, plays a pivotal role in shaping the monetary policy. CRR is one of the tools in the RBI's arsenal that aids
