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Currency Deposit Ratio - Meaning, Importance and Calculation

What is Currency Deposit Ratio - Teachoo.JPG

Important Points About CDR - Teachoo.JPG

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What is Currency Deposit Ratio It is the Ratio of Money held by Public in Currency to Money held by Public in Deposits Currency Deposit Ratio = Money held by Public in currency Money held by Public in Deposits Example Suppose a person earns Rs 100000 Salary in Cash He spends Rs 80000 in cash He deposits balance Rs 20000 in his bank account In this case Currency Deposit Ratio = Money held by Public in Deposits Money held by Public in currency Important Points About CDR CDR Reverse Calculation If a person earns Rs 10000 CDR = 4 Amount deposited in bank = 1/(1+CDR) = 1/(1+4) = 1/ 5 =0.2= 20% Amount kept as cash = CDR/(1+CDR) = 4/(1+4) = 4/ 5 =0.8 =80% Does CDR always Remain Same No, it keeps on fluctuating Example It increases during Festive Season (as people spend more)

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 12 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.