Maximum credit that the commercial bank create legally is indicated by A-1/CRR *cash reserves of rbi or B-1/crr*total deposits I am also posting picture?experts plz help me I am not able to understand question?According to me there is credit multiplier =1/crr why in this mutiplied by cash reserve with rbi ?what is this question trying to ask? Plz expert help me?If it can be better be understand by numerical plz post one numerical for me?

Shivang,

Maximum credit that commercial bank can create legally is indicated by $\frac{1}{CRR} \times \mathrm{Cash} \mathrm{reserves} \mathrm{with} RBI.$
Suppose, the CRR is 5%. If commercial banks are likely to get new cash deposits from public and will be able to deposit additional Rs 15000 with RBI in the form of cash reserves,  then the maximum credit that the commercial bank can legally create is:
$$\begin{gathered} \frac{1}{5\%} \times 15000 \\ 20 \times 15000 = \mathrm{Rs} 3,00,000 \end{gathered}$$

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