The correct answer is option 'D', Koyna River.

Koyna Dam is located in the state of Maharashtra, India. It is one of the largest dams in Maharashtra and a significant source of hydroelectric power. The dam is built on the Koyna River, which is impounded to form the Koyna reservoir.

Here is a detailed explanation of the answer:

1. Location of Koyna Dam:
The Koyna Dam is situated in the Western Ghats of Maharashtra, near the town of Koynanagar in Satara district. It is built in the Koyna River valley, which is a tributary of the Krishna River.

2. Koyna River:
The Koyna River originates in Mahabaleshwar and flows through the Sahyadri mountain ranges. It is a major tributary of the Krishna River. The river passes through dense forests and scenic landscapes before reaching the Koyna Dam site.

3. Impoundment of Koyna River:
The Koyna Dam is a gravity dam that impounds the Koyna River. The dam is constructed across the river, creating a reservoir or a water body behind it. The reservoir formed by the dam is known as the Koyna reservoir.

4. Purpose of Koyna Dam:
The primary purpose of the Koyna Dam is to generate hydroelectric power. It has a substantial installed capacity of 1,960 MW, making it one of the largest hydroelectric power stations in India. The dam's reservoir also serves as a water source for irrigation and drinking water supply to nearby areas.

5. Importance of Koyna Dam:
The Koyna Dam and the hydroelectric power station play a crucial role in meeting the electricity demands of Maharashtra. The dam's reservoir and the surrounding area are also popular tourist destinations, attracting nature enthusiasts and adventure seekers.

In conclusion, the Koyna Dam impounds the Koyna River to form the Koyna reservoir. The dam is a significant source of hydroelectric power and is located in Maharashtra, India.