Question

Explain the credit creation role of commercial banks with the help of a numerical example. ​

Answer 1

Explanation:

Money/credit creation is an important function of the commercials banks. ... 10,000/-, then the commercial banks are crediting credit ten times of their cash reserves. Accordingly, on the basis of cash reserves of Rs. 1,000/-, the commercial banks are contributing Rs 10,000/- to the supply of money.