Cash Reserve Ratio: How RBI Controls Inflation
Explainer📅 25 Jul 2026Plain-English · Educational✔ Reviewed by CA Amit Jain
The Cash Reserve Ratio (CRR) is the percentage of deposits that commercial banks must keep with the Reserve Bank of India (RBI). It's a key tool to control inflation and manage liquidity. But how does it work?
What exactly happened
- The RBI sets the CRR rate to control inflation and manage liquidity
- Banks must maintain the CRR on a daily basis
- The current CRR rate can be found on the RBI's official website
- The CRR affects interest rates on loans and savings accounts
- The RBI uses the CRR as part of its monetary policy framework
Key takeaways
- The CRR is a key monetary policy tool used by the RBI
- The CRR rate is set by the RBI and can be found on their website
- The CRR affects interest rates on loans and savings accounts
- The RBI uses the CRR to control inflation and manage liquidity
How does the Cash Reserve Ratio affect me?
The CRR can make borrowing more expensive or cheaper, depending on its rate. It also affects interest rates on savings accounts.
Questions people ask
What is the purpose of the Cash Reserve Ratio?
The purpose of the CRR is to control inflation and manage liquidity by reducing or increasing the amount of money available for banks to lend.
Where can I find the current CRR rate?
The current CRR rate can be found on the RBI's official website.
plain-English explainer, never regulator text verbatim. Where an exact figure matters, confirm it on the official RBI source.