Strict Definition: This is the true meaning of the term "Fractional Reserve Banking". Depositors' money is used to perform loans by the bank but depending on the jurisdiction (country) a certain percentage of the deposited funds should be held by the financial institution to satisfy the withdrawal demands. Over the years, requirements have been reduced by governments of some of the wealthier economies, and reserve requirements in different countries ranges between 0% to 10%.
Wider Scope Definition: In addition to the above stated meaning some do extend the scope of the definition of the term to include a practice, which more accurately has been termed as "Credit Creation", "Money Creation out of Thin Air" or "Fiduciary Note Creation". These terms refer to the legalized practice of the ability of banks to issue higher amounts in loans than the deposits they are actually holding. Again various reserve requirements have been reported in different countries. What is certainly the case is that the banks charge interest on the created money and that alone adds to the money supply and thus has an inflationary effect. But it appears that the created principal in form of credit after being returned to the bank does disappear into thin air having a deflationary effect. I would very much myself like to find out exact facts and numbers for different countries. I encourage knowledgeable economists to clarify the statements made here.