Crr

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Rahul kumar

Rahul kumar (Querist)

10 October 2012 Dear members please give me information about "CRR" and how it is calculated.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)

11 October 2012 Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI. If the central bank decides to increase the CRR, the available amount with the banks comes down. The RBI uses the CRR to drain out excessive money from the system.

In terms of Section 42(1A) of RBI Act, 1934, the Scheduled Commercial Banks are required to maintain, in addition to the balances prescribed under Section 42(1) of the Act, an additional average daily balance, the amount of which shall not be less than the rate specified by the RBI in the notification published in the Gazette of India, such additional balance being calculated with reference to the excess of the total of the NDTL of the bank as shown in the return referred to insection 42(2) of the RBI Act, 1934 over the total of its NDTL at the close of the business on the date specified in the Notification.

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