In this article you get to know about CRR full from and other different abbreviations of CRR in various fields. CRR full form refers to Cash Reserve Ratio.
The Cash Reserve Ratio is the minimum percentage of a bank’s total deposits that it is required to keep as reserves with the central bank of the country. The reserve can be held either in the form of cash or as a deposit with the central bank. The purpose of the CRR is to ensure that banks have adequate cash reserves to meet depositor demands and to provide a cushion against unexpected deposit withdrawals. In India, the Reserve Bank of India sets the CRR for banks. As of September 2021, the CRR in India is 3%, which means that banks are required to maintain a minimum of 3% of their total demand and time liabilities as cash reserves with the RBI.
Example which illustrate how CRR works:
Suppose a bank has total demand and time liabilities of Rs. 100 crores. As per the current CRR in India, the bank is required to keep a minimum of 3% of its total deposits as cash reserves with the RBI. Therefore, the bank must hold Rs. 3 crores (3% of Rs. 100 crores) as reserves with the RBI. If the bank holds Rs. 2 crores as cash reserves with the RBI, it is not meeting the CRR requirement and will be penalized by the central bank. The penalty is typically in the form of an interest payment that the bank must make to the RBI for the shortfall in the required reserve amount.
If the bank holds Rs. 4 crores as cash reserves with the RBI, it is exceeding the CRR requirement and will not earn any interest on the excess reserve amount. The CRR is an important tool for the central bank to regulate the liquidity position of banks and ensure the stability of the banking system. By requiring banks to maintain a certain percentage of their deposits as cash reserves with the central bank, the CRR helps ensure that banks have adequate liquidity to meet depositor demands and provide a cushion against unexpected deposit withdrawals.
The Cash Reserve Ratio is calculated as a percentage of a bank’s total demand and time liabilities. The RBI sets the CRR requirement, and the percentage can be changed from time to time based on the monetary policy objectives of the central bank.
The formula for calculating CRR is:
CRR = (Amount of Cash Reserves Required / Total Demand and Time Liabilities) * 100
For example, if a bank has total demand and time liabilities of Rs. 1,000 crores and the CRR requirement is 4%, the calculation of the CRR would be as follows:
CRR = (4 / 100) * 1000 crores = Rs. 40 crores
This means that the bank must maintain cash reserves of Rs. 40 crores with the Reserve Bank of India as a percentage of its total demand and time liabilities. The RBI typically announces changes in the CRR requirement during its monetary policy announcements, which are held every quarter. When the CRR requirement is changed, banks must adjust their cash reserves accordingly within a specified timeframe. The CRR is calculated as a percentage of a bank’s total demand and time liabilities, and it is used as a tool by the central bank to regulate the liquidity position of banks and ensure the stability of the banking system.
Different abbreviations of CRR in various fields are as follows
|CRR||Customer Retention Rates||Business|
|CRR||Capital Requirements Regulation||Business|
|CRR||Consult Review Request||Business|
|CRR||Contract Rights Renewal||Business|
|CRR||Check Report Receipts||Business|
|CRR||Cyber Resilience Review||Computing|
|CRR||Cooperative Rearranging Regions||Computing|
|CRR||Continuous Remote Replication||Computing|
|CRR||Cyclic Redundancy Rate||Technology|
|CRR||Chemically Reacted Rubber||Technology|
|CRR||Cable Routing Rotation||Technology|
|CRR||Computer Run Report||Technology|
|CRR||Credit Risk Rating||Finance|
|CRR||Credit Relative Ranking||Finance|
|CRR||Crombie Real Estate Investment Trust||Finance|
|CRR||Cash Reserve Ratio||Banking|
|CRR||Computing Resources Requirements||Academic & Science|
|CRR||Center For Research Reactor||Academic & Science|
|CRR||Cosmological Recombination Radiation||Academic & Science|
|CRR||Comparative Risk Ratio||Academic & Science|
|CRR||Crystal River Railway||Travel|
Dear reader in this article you get to know about CRR full from and CRR term used in various other fields, If you have any query regarding this article kindly comment below.