Business Standard: India’s hidden credit constraints
(this article appeared in Business Standard on 24th March 2026, link below: https://www.business-standard.com/amp/opinion/columns/india-s-hidden-credit-constraints-issue-lies-in-pricing-regulation-126032301248_1.html ) India’s hidden credit constraints Its credit problem may lie less in liquidity and more in how it is priced and regulated By Ananth Narayan Even with abundant banking liquidity, banks continue to scramble for deposits. Overall, India’s credit ecosystem remains small relative to the size of our economy. All this reflects a combination of tax incentives, regulatory structures, and monetary conditions that suppress the attractiveness of fixed income and constrain credit expansion. In turn, this has wider implications for our asset markets and external balance. Sizing the problem Data from the Reserve Bank of India (RBI), the Securities and Exchange Board of India, and the World Bank suggests that India is a global outlier in the re...