What is ‘Credit Creation’?

  1. Multiple Expansion of Deposits
  2. Reducing the volume of NPAs
  3. Expansion of customer base
  4. Providing value addition to existing services
  5. Both 1 and 3
Desire Adnan Default Asked on 6th August 2015 in Finance.
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Multiple Expansion of Deposits

Credit Creation is Multiple Expansion of Deposits.  It is the most important function of commercial banks. The whole circle or structure of Banking is based on credit. You know that people cannot withdrawal money in simultaneous, Some with drawl while other deposit at Same Time. So Bank Encourage Credit Creation By Given Advance to other, Keep Small Cash in reserve use for day to day transaction.

Monis Rasool Professor Answered on 6th August 2015.
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