the cash reserve ratio in india is 4 %.
the cash reserve ratio in india is 4 %.
what is the cash reserve ratio in india?
4 %
the key financial ratio used to analyze fractional-reserve banks is the cash reserve ratio, which is the ratio of cash reserves to demand deposits. however, other important financial ratios are also used to analyze the bank's liquidity, financial strength, profitability etc.









































for example, the anz national bank limited balance sheet above gives the following financial ratios:









































bullet::::1. the cash reserve ratio is $3,010m/$25,482m, i.e. 11.81%.









































bullet::::2. the liquid assets reserve ratio is ($201m + $2,809m + $1,797m)/$25,482m, i.e. 18.86%.









































bullet::::3. the equity capital ratio is $8,703m/107,787m, i.e. 8.07%.









































bullet::::4. the tangible equity ratio is ($8,703m − $3,297m)/107,787m, i.e. 5.02%
fractional-reserve banking
commercial banks have to maintain a minimum cash balance known as the cash reserve ratio. call money is a method by which banks lend to each other to be able to maintain the cash reserve ratio. the interest rate paid on call money is known as the call rate. it is a highly volatile rate that varies from day to day and sometimes even from hour to hour. there is an inverse relationship between call rates and other short-term money market instruments such as certificates of deposit and commercial paper. a rise in call money rates makes other sources of finance, such as commercial paper and certificates of deposit, cheaper in comparison for banks to raise funds from these sources.
call money