Explanation

The money multiplier represents the maximum extent to which the commercial banking system can expand the money supply for every unit of central bank reserve money (M3 / M0).

– Option C is correct: When the banking habits of the population improve, people hold less cash in hand and deposit a larger proportion of their income into bank accounts. This reduces the currency-deposit ratio (CDR). A lower CDR means banks have more deposits to create secondary credit through repeated lending cycles, which directly increases the money multiplier.
– Options A and B are incorrect: Raising reserve requirements like the Cash Reserve Ratio (CRR) or Statutory Liquidity Ratio (SLR) impounds loanable funds with the RBI or government securities, restricting the capacity of commercial banks to create credit and thereby reducing the money multiplier.
– Option D is incorrect: A sheer increase in population does not expand the money multiplier unless those individuals actively participate in the formal banking channel.

Hence, the correct answer is Option C.