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INCREMENTAL CASH RESERVE RATIO

Outlook Money

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September 2023

The Reserve Bank of India (RBI) in its bimonthly policy in August announced that banks will need to maintain 10 per cent incremental cash reserve ratio (ICRR) starting from August 12.

- Kundan Kishore

INCREMENTAL CASH RESERVE RATIO

This will be applicable on the increase in net demand and time liabilities (NDTL) of banks between May 19 and July 28, 2023. RBI has taken this temporary measure to drain excess liquidity from the banking system. RBI had earlier withdrawn ₹2,000 banknotes from circulation and gave people the option to either deposit or exchange them by September 30, 2023. Let's delve into what ICRR entails, its significance, and how it aids liquidity management.

WHAT IS CRR? 

▪ Before understanding ICRR, it is important to understand what is the cash reserve ratio (CRR).

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