The process of credit creation is considered one of the most important functions performed by a commercial bank. The central bank of a country is responsible for ensuring the supply of money in the economy by circulating the currency. It also ensures that for fulfilling all the transactions, there should be appropriate currency in the system. This process cannot be implemented by the central bank alone. For this, they require the help of commercial banks and their reserves. Commercial banks perform the function of credit creation in an economy. Therefore, the money that is created by commercial banks is known as credit money. This is achieved by the commercial banks in the form of purchasing securities and providing loans. The commercial banks facilitate the loans by utilising the deposits that are obtained from the public. There are restrictions on the amount of money that can provide credits from the total deposits that a bank obtains from the public. As per the rule, the commercial banks need to maintain a certain portion of the public deposits as reserves with the central bank that will be used for meeting the immediate cash requirements of the depositors. Only after keeping aside the required amount of those reserves the commercial banks are permitted to lend those amounts to individuals or businesses.