I think the point of the article was that all money in financial system remains with financial institutions such as banks until someone withdraws it as cash.
Even when it is invested in stocks, there is always a seller who will recieve the money in his bank account.
Similarly the money used for ipo applications also resides in bank account. So it is already with banks.
For loan book to grow, deposits need to grow and for that supply of money (rupees) need to increase.(domain of RBI).
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