[Solved] Commercial banks create credit -

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Q.	Commercial banks create credit -
A.	on the basis of their securities
B.	on the basis of their assets
C.	on the basis of their reserve fund
D.	on the basis of their deposits
Answer» D. on the basis of their deposits
Explanation: Commercial banks create credit on the basis of their deposits. Credit creation is the multiple expansions of banks demand deposits. Whenever, customer deposits sum of money, a part of that money is kept by the commercial banks with the credit bank of the country which is obligatory by the law. The amount of credit that can be created by the bank will depend on the primary deposits and also on the amounts of minimum legal resource requirement.

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