Which of the following statements is correct about commercial banks ?

A. Considered as Money Creating system of the Indian Economy

B. They accept deposits from the public at a lower interest rate and lend out part of these funds at a higher interest rate

C. The difference between the interest rate paid to depositors and charged for lending is called "Spread".

D. Commercial banks in isolation control the money supply in India.

Choose the correct answer from the options given below:

1. (A), (B), (C) and D
2. (A), (B) and (D) only
3. (A), (B) and (C) only
4. (A) and (D) only

Option 1 -> Includes statement D which is incorrect as commercial banks do not control money supply in isolation; it's controlled by RBI.

Option 2 -> Includes statement D which is incorrect as commercial banks do not control money supply in isolation; it's controlled by RBI.

Option 3 -> Correctly includes A, B, and C. Statement A is correct as banks create money through credit creation. Statement B is correct as banks accept deposits at lower rates and lend at higher rates. Statement C is correct as the difference is called spread. Statement D is excluded correctly as RBI controls money supply, not commercial banks in isolation.

Option 4 -> Includes incorrect statement D and excludes correct statements B and C.

Hence, Option 3: (A), (B) and (C) only -> Commercial banks are indeed money creators through the credit multiplier process (A). They operate by borrowing at lower rates and lending at higher rates (B), with the difference called spread (C). However, statement D is incorrect because money supply in India is controlled by the Reserve Bank of India (RBI) through monetary policy tools like CRR, SLR, repo rate, etc. Commercial banks participate in money creation but do not control it in isolation - they work under RBI's regulatory framework. -> correct