Cash reserve ratio

The proportion of deposits a bank must hold as cash with the central bank, earning nothing.

A bank with ₹55,000 crore of deposits at a 4.5% requirement holds ₹2,475 crore sterile.

The ratio is both a monetary tool and a tax on banking. Raising it withdraws liquidity from the system and simultaneously reduces bank profitability, because the reserved money earns no interest while the deposit it came from still costs interest.

Current rates are set by the central bank and change. Verify before using a figure.