Explanation:

CRR is the percentage of bank deposits that banks are required to maintain with the Reserve Bank of India in the form of reserves. ? The Cash Reserve Ratio (CRR) is the minimum percentage of total deposits(ie. NDTL) that a commercial bank is required to retain as cash reserves with the RBI. ? It has to be in the form of Cash. ? It applies to all Scheduled commercial banks. ? For Instance, let us consider that Bank A has received 100 CroresasDeposits. If we have a CRR of 3% then Bank A has to deposit 3 croresinCashform with the RBI and is left with 97 crores for its operation. ? When a central bank raises the CRR, the amount of money accessible to banks reduces or falls, and vice-versa. ? It has to be placed in a vault in the bank or placed with the RBI. ? The RBI Act 1949, Section 42 gave a provision for the RBI to announce a CRR between 3%-15%. This was amended in 2007 by removing the lower ceiling making it 0-15%.