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Cash Reserve Ratio

Commercial banks have to mandatorily keep a certain minimum amount of deposits as reserves with RBI.

The percentage of cash that is to be kept this way is called the cash reserve ratio.

This money can’t be used for lending or for investment. Nor do the banks receive any interest on this amount. The cash is kept only to make sure that there is money available to banks to deal with any emergencies.

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Last updated 2 years ago

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