Cash Reserve Ratio (CRR:

The reserve requirement (or required reserve ratio) is a bank regulation, which sets  the minimum reserves each bank must hold to customer deposits. In most countries banks are required to keep a minimum percentage of deposits on hand, known as the required reserve ratio. This required reserve ratio is put into place to ensure that banks do not run out of cash on hand to meet the demand for withdrawals.These are normally in the form of fiat currency stored with the central bank. The reserve ratio is sometimes used as a tool in monetary policy, influencing the country's economy, borrowing, and interest rates. However, in the India or the US or many other ecnomies, the central banks rarely alters the reserve requirements. Instead, open market operations are used more commonly(discussed later). As of 2006 the required reserve ratio in India was 5% of deposits although this ratio was very high at 15 percent in the early nineties.