Data: Cash Reserve Ratio (CRR) of Commercial Banks in Nepal

April 12, 2024 | Investopaper

Cash Reserve Ratio (CRR) is set by the central bank to regulate the amount of cash that commercial banks are required to retain in reserve. It is stated as a percentage of the total deposits that a bank is required to maintain in its vaults or with the central bank. Central banks can affect the liquidity in the banking system by changing the CRR.

Banks must hold larger reserves when the central bank raises the CRR, which lowers the amount of money available for lending and investment. This restricts the amount of money available to the economy, which helps to manage inflation. On the other hand, banks have more money available for lending and investment when the central bank lowers the CRR, which promotes economic growth.

In order to achieve macroeconomic goals such as containing inflation and fostering economic stability, central banks can control the amount of money in circulation, influence interest rates, and oversee the banking system’s liquidity through the use of the CRR.

The table below presents the monthly data of Cash Reserve Ratio (CRR) of commercial banks of Nepal since the year 2012.

In %

Source: Nepal Rastra Bank

Facebook

Tweet

Gmail