Question

What is meant by Cash Reserve Ratio (CRR)?

Options

• Minimum percentage of deposits kept as cash by banks with the central bank

• Maximum amount of loan a bank can give to one borrower

• Percentage of deposits invested in government securities

• Minimum balance to be kept by customers in their accounts

Answer 1

Minimum percentage of deposits kept as cash by banks with the central bank

Explanation: 

CRR is the minimum proportion of a bank’s total deposits that must be kept as cash with the central bank, which helps control the total credit created by banks.