Commercial banks provide loans against

Collateral securities

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Assets which are held as mortgage

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A or B

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Both A and B

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Solution

The correct option is C
A or B

Commercial banks provide loans against collateral securities or by keeping some assets as mortgage. Hence the amount of credit creation is also limited by the total amount of mortgageable assets in the country.

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The house kept with the bank as mortgage acts as a security for the loan. Hence, it is ___________ to the bank

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