The Cash Reserve Ratio is the amount of funds that the banks are bound to keep with Reserve bank of India, with reference to the demand and time liabilities (NDTL) to ensure the liquidity and solvency of the Banks. Please note that earlier RBI was empowered to fix RBI between 3-20% by notification. However, from 2006 onwards the RBI is empowered to fix the CRR on its discretion without any ceiling. The CRR is maintained fortnightly average basis.
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Current CRR is 5.5%
On January 25, 2012 CRR, which is the level of deposits that banks have to mandatorily maintain with RBI, was reduced to 5.5% from 6%. This reduction was RBI's first reduction in CRR since January 2009 when it had released funds to stimulate demand in the wake of the Lehman Brothers crisis.
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