Cash Reserve Ratio (CRR)

All Scheduled Commercial Banks are required to keep a portion of money received from its customer with RBI this is called Cash Reserve Ratio. But Why ?  the answer can be known by reading below article on CRR,

All of we know RBI is the controller of Banks and the monetory / credit system of our country. The RBI act gives it wide powers to do so. Cash Reserve Ratio is one such power of RBI.

As per Section 42(1) of RBI act of 1934 RBI having regard to securing monetary stability of the country prescribes CRR without any floor or ceiling rate.