Are you looking for the full form of CRR and the meaning of CRR? So, in this post, we are going to learn about what is CRR, what CRR stands for, the abbreviation, and the acronym for CRR, and also know CRR meaning and its definition in different categories. So you should read this post till the end.
The Full Form of CRR: Cash Reserve Ratio
CRR stands for Cash Reserve Ratio. It is compulsory for commercial banks to deposit a certain percentage of their total cash with the Reserve Bank. There is a fixed percentage or proportion involved.
Depending on the proportion of the deposit, the Reserve Bank of India decides how to deposit it. It is usually between 3 and 15% to have a cash reserve ratio.
In short, This is the proportion or percentage of commercial banks’ total deposits that they keep with the Reserve Bank in the form of a Cash Reserve Ratio.
Banks keep these deposits in their current accounts with the Reserve Bank. Commercial banks do not receive any interest on these deposits from the Reserve Bank as it does with traditional current accounts.
Commercial banks are not allowed to use this amount held with the Reserve Bank. The money cannot be used for economic or business purposes. It is even impossible for commercial banks to lend this part to entrepreneurs or the general public.
Example of CRR in Banking
Let’s understand with an example, There is a deposit of Rs 5 lakh with a commercial bank. The CRR rule of 3 percent is currently in effect. The bank must keep 3 percent of Rs 15,000 with the Reserve Bank from its deposit of Rs 5 lakh with the Reserve bank.
This Rs 15000 cannot be used by a commercial bank for any kind of business or investment activity. On behalf of the bank, these 15000 rupees will be deposited in a Reserve Bank current account.
The remaining 4,85,000 will be used by the commercial bank for its daily activities, such as lending and investing.
The objective of the Cash Reserve Ratio
- Inflation, money supply, and liquidity in the economy are all controlled by the cash reserve ratio.
- Using CRR in the economy allows people to control their purchasing power. RBI increases the CRR when purchasing power increases, thus controlling purchasing power.
- Due to banks’ requirement to keep a portion of their deposits at the RBI, depositors can rest assured that their money is safe.
- In such a case, banks can use the reserve cash kept with RBI if they cannot meet the withdrawals by depositors.
Differences between CRR and SLR
there are different types of points that prove, How the Cash Reserve Ratio is different from the Statutory Liquidity Ratio? let’s understand the Difference between CRR and SLR
|Cash Reserve Ratio (CRR)||Statutory Liquidity Ratio (SLR)|
|The Monetary Policy Committee of the RBI decides on the CRR as a monetary policy tool.||The RBI Monetary Policy Committee also decides on SLR as a monetary policy tool.|
|CRR is a reserve that banks have to keep with RBI.||SLR is a reserve that banks have to keep with them.|
|There needs to be a cash reserve for CRR.||Gold, cash, or other approved securities are used to maintain SLR.|
|CRR gives control over inflation and the money supply in the economy.||SLR helps the banks to face sudden huge withdrawals by the depositors.|
|CRR also helps in regulating the liquidity in the economy.||SLR helps in regulating the credit facility.|
|In the case of CRR reserve, banks do not earn any interest on the reserve amount.||In the case of SLR reserve, banks can earn interest on the reserve amount.|
|The CRR rate is decided by the RBI Monetary Policy Committee.||The SLR rate is decided by the Monetary Policy Committee of RBI.|
Now you might have got some ideas about the abbreviation, acronym, full form, and meaning of CRR. But, some of the most commonly used acronyms, abbreviations, full-forms, and the CRR meaning are listed in different categories below the table.
CRR meaning and FAQs
We have discussed what CRR stands for, as well as the full form, meaning, and definition of CRR. Now we are going to discuss some frequently asked questions on the internet. So, there are many FAQs on the meaning and the full form of CRR. Let’s explore CRR Meaning and FAQs.
What is the full form of CRR in Banking?
The Full Form of CRR is “Cash Reserve Ratio ” in the context of banking. the Definition of CRR and all possible meanings are given above, You might also like some similar terms related to CRR.
What is the meaning of CRR in finance?
The meaning of CRR is “Cash Reserve Ratio ” in finance. Check out all the meanings of CRR one by one, You might be searching for another term that is similar to CRR. since there may be more than one meaning of CRR.
What does CRR stand for?
CRR stands for “Cash Reserve Ratio “. CRR is also related to some other terms that you might like to know more about. so check out all meanings of CRR in the Above post section.
What does CRR mean in the bank?
CRR means “Cash Reserve Ratio ” In the terms of banking system. Earlier, we explained what CRR means. you can read Most used CRR Full Form and Meaning. check-out related information in the above section.
What is the acronym of CRR in computing?
CRR is an acronym for “Computer Run Report”. The Definition & Meaning of CRR in Different Categories discussed above.
What is the full name of CRR in computer?
The full name of CRR “Computer Run Report” Finally, we also discussed all the important things about, What is that CRR and also related to the full name of CRR.
what does the abbreviation CRR stand for
The abbreviation of CRR represents “Cash Reserve Ratio “. You can also know some Most Using Full-Form and The meaning of CRR in the above section
What is the CRR Meaning in Accounting?
The CRR means “Credit Risk Rating”. It is the most commonly used acronym in Accounting. It may be more than one meaning of CRR so check out one by one in the above section.
What is the CRR Full Form in banking?
CRR is a RBI banking term that stands for “Cash Reserve Ratio“. It has many other Full Forms there are listed Above.
In this post, we discussed all the important things about what CRR stands for, full form, meaning, and definition. You will not only get all the possible CRR full forms and meanings. but also all popular full forms, acronyms, abbreviations, and their meanings and definitions.