What is Cash Reserve Ratio?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. Percentage of deposits that a bank must keep as cash reserves with the central bank.
The Cash Reserve Ratio (CRR) is the proportion of a bank’s total deposits that it is required to hold in reserve, in the form of cash or deposits with the central bank (such as the Reserve Bank of India). This is a regulatory measure used to control liquidity and ensure the stability of the banking system. Banks cannot use these reserves for lending or investment purposes.