Under which statutory provision is the Cash Reserve Ratio (CRR) maintained by commercial banks in India?

💡 Solution & Explanation

The Cash Reserve Ratio, which dictates the fraction of total deposits that commercial banks must keep with the central bank, is statutorily mandated under Section 42(1) of the Reserve Bank of India Act, 1934. Meanwhile, the Statutory Liquidity Ratio governing liquid asset holdings is specified under Section 24 of the Banking Regulation Act, 1949. The Reserve Bank of India possesses the statutory authority to fix CRR without any upper or lower limits following amendments to the RBI Act.