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Cash Reserve Ratio (CRR)
The cash reserve ratio is the percentage of a bank’s deposits that it must keep as cash with the RBI. The bank earns no interest on this money and cannot lend it out. Raising the CRR takes money out of the lending system; cutting it releases money.
Why It Matters
A one-point CRR cut can free up more than ₹2 lakh crore for banks to lend.
In India
The RBI cut the CRR in stages during 2025 to 3%, releasing a large amount of cash into the banking system to support lending.