Cash Reserve Ratio (CRR)

As per section 42 (1) of the RBI Act, 1934, every commercial bank has to maintain with the RBI (every fortnight) a minimum of 3% of its NDTLs compared to the previous Friday.

For example, if CRR is to be calculated today (assuming that today is that reporting fortnight), then it will be only 3% of the NDTLs on the previous Friday.

Found that confusing? Here’s an example that should make it easier.

Assume July 25 is the Friday on which the bank has to make its report.

Bank A, which has a NDTL of Rs 100 on July 18 (the previous Friday), will have to maintain a CRR of Rs 3 with the RBI on July 25 (assuming it has been asked to keep a CRR of 3 per cent).

CRR, as of today, stands at 8.75 per cent. This is over and above the SLR requirement.

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