Every country has its own financial system and every country’s financial system is different from the others. Some are stock market dominated and others are banking industry dominated. India is dominated mainly by banking system with lot of people depositing their money into the banks rather than investing it in the stock markets. Most popular instruments with Indian population, primarily with parents, is FD i.e. Fixed Deposits. The reason behind preference for banks can be risk aversion, with banks being considered safer than stock markets. We should remember that banks also can fail, giving depositors a run for their money. That is why people consider depositing their money with trustworthy banks. Trustworthy are those which have been in the market since a long time and have established a reputation. One of them is State Bank of India. It is the largest public sector lender bank in the country. The largest private sector bank, as of April 2022, was HDFC. Apart from depositing, borrowing money from banks is also very prevalent. So, major financial needs of Indian diaspora are being fulfilled by banks.

Is there a limit on credit which can be created by banks?

Yes No Sometimes Varies from economy to economy

Yes

Yes and it is decided by RBI. RBI decides a certain percentage of deposits which banks need to keep as reserves to ensure no bank is over lending.