Skip to navigationSkip to content
NOT GIVING ENOUGH CREDIT

The weakness at the heart of India’s economy

India-Banks-Loans
REUTERS/Rupak De Chowdhuri/Files
Waiting for demand revival.
  • Prathamesh Mulye
By Prathamesh Mulye

Writer, banking and economy

Published

A weak banking system has come back to haunt India’s economy during the pandemic.

The country’s recovery has been slow and elusive in the wake of a stringent, months-long lockdown that drove it into a deeper recession than most of the world’s large economies. According to the data released by the government, India’s economy contracted by 24% and 7.5% year-on-year in the first two quarters of the current financial year.

Such a sharp downturn has pushed the authorities into action. India’s central bank has slashed the repo rate (the rate at which Reserve Bank of India lends to banks) to a record low and infused liquidity into the markets through innovative measures. In unprecedented moves, the central bank bought bonds in open market for the first time, and offered money at a cheaper rate to banks for one-to-three-year period. But this hasn’t moved the needle of credit growth.

Enrich your perspective. Embolden your work. Become a Quartz member.

Your membership supports our mission to make business better as our team of journalists provide insightful analysis of the global economy and helps you discover new approaches to business. Unlock this story and all of Quartz today.

Membership includes:

こちらは英語版への登録ページです。
Quartz Japanへの登録をご希望の方はこちらから。