text: India RBI chief sees cut in cash reserve ratio . NEW DELHI 1996-08-22 The Reserve bank of India governor C. Rangarajan said on Thursday that he expected the cash reserve ratio ( CRR ) maintained by banks to be reduced over the medium term . " Over the medium term , yes , " he told Reuters after addressing industrialists in the capital . He denied having said in a recent newspaper interview that the CRR could be raised if necessary . He said he was only trying ( in that newspaper report ) to explain the theoretical position on the use of the CRR by central banks to manage money supply . Rangarajan explained that the cash reserve ratio was an instrument that central banks could use to regulate money supply by reducing or increasing the ratio . But in the current context , the government stood by an earlier commitment to reduce it over a period of time , he said in response to a question . -- New Delhi newsroom , +91-11-3012024