ExtendingcreditorcreatingcreditreferstooneoftheimportantfunctionsofcommercialbanksthathelpinincreasingmoneysupplyForinstanceabanklends5lakhtoanindividualandopensademanddepositinthenameofthatindividualBankmakesacreditentryof5lakhinthataccountThisleadstocreationofdemanddepositsinthataccountThepointtobenotedhereisthatthereisnopaymentincashThuswithoutprintingadditionalmoneythesupplyofmoneyisincreased