CRR Full Form: What is the Full Form of CRR
Full Form of CRR: Here in this post we are going to discuss about CRR, CRR Full Form, How CRR calculated, Objective of CRR, and many more.
CRR Full Form
CASH RESERVE RATIO
CRR full form is Cash Reserve Ratio. Cash Reserve Ratio (CRR) is decided by the Reserve Bank of India and revises time to time. CRR is the share of bank’s total deposit which is reserve with the RBI in cash form to mention liquidity ratio.
CRR is one of the most effective weapons of Reserve Bank of India to control the inflation rate. When the rate of CRR increase banks have to mention more cash in liquid form due to that supply of currency get decrees and inflation come under control.
However increase in CRR has some negative impact also because of higher CRR growth of economy goes down, slowdown in new investment etc.
How CRR calculated
We understand how we calculate CRR with an example:-
For example on the current time rate of CRR is 5% and total deposit in a bank is 100 crore the CRR will be 100*5/100 = 5 crore.
The bank must have deposits with RBI in cash from minimum to CRR and can’t use for loan or any other investment. However if banks want they can maintain cash in liquid form more than CRR.
Objective of CRR
CRR used as the reference for the determination of base rate below which a bank not allows to maintain the cash in liquid form.
Cash reserve ration insure bank’s minimum deposit with the RBI that is very secure.
CRR is the secret weapon of RBI by which RBI control the inflation rate in the economy.
FAQ (Frequently Asked Question)
Answer: CRR is the share of bank’s total deposit which is reserve with the RBI in cash form to mention liquidity ratio. SLR is the minimum deposits that a bank has to maintain in form of cash, gold or other approved securities.
Answer: The rate of CRR is frequently change but at the current time CRR rate is 4%.
Answer: Full form of SLR is statutory liquidity ratio.
Answer: SLR is the minimum deposits that a bank has to maintain in form of cash, gold or other approved securities. This reserve is made to keep customer deposits safe.
Answer: CRR full form is Cash Reserve Ratio.
Answer: MSF is the rate at which reserve bank of India lends loan to schedule banks against government securities.
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