How to break through the transmission bottlenecks for small non-banks

Image credit: The Economic Times

By Shilpa Kumar, Amol Warange and Ajay Srinivasan

This 'transmission conundrum' is not new. Rate reductions against the backdrop of difficult economic situations have often been negated by increasing credit spreads charged by financial intermediaries with direct and greater access to central bank money.

Even after two successive Covid waves, most government and central bank actions to enable cheaper and plentiful credit don't seem to have been fully transmitted to the demographic that needs it the most, and where it would be most impactful.

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