ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Gender Gap in Credit in India

Are women less risky in terms of loan repayment as compared with men? Using data on public sector Indian banks, we present evidence to this effect. The key insights emanating from the analysis are the following. First, non-performing loans arising out of credit extended to women decline by 7.5% on average, after controlling for bank-level and macroeconomic factors. Second, the decline in NPLs out of the credit extended is primarily with regard to priority sector credit and less so with respect to non-priority credit. We view this as one of the early exercises in the Indian context to examine the linkage between gender credit gap and the resultant NPLs.

Lazy Banking Will Not Help

The non-performing asset ratio has been culled by tightening credit flows to productive sectors.

Monetary Policy in the Midst of Cost-push Inflation

The Reserve Bank of India adopted inflation-targeting monetary policy based on the New Keynesian 3-equation model. How realistic are the assumptions, and how effective have monetary policy instruments been in controlling the inflation rate? Given India’s structural specificities, what are the implications of cost-push inflation for policy rate and output gap? This paper addresses these questions by identifying alternative theoretical possibilities within a simple 3-equation model and locating the Indian specificity by estimating the Phillips curve and monetary policy rule equation. The analysis points towards the constraints of monetary policy in India due to presence of a flat Phillips curve and indicates the possibility of adverse effect on output gap due to presence of Taylor’s rule.

Taming Inflation by Anchoring Inflation Expectations

By firmly anchoring inflation expectations, monetary policy can prevent a wage-price spiral and moderate the second-round effects of supply shocks, thereby avoiding an inferior macroeconomic outcome of lower growth and higher inflation.

Monetary Growth, Financial Structure, and Inflation

It is argued that a key question of the operation of monetary policy is its decomposition into a price effect and an output effect. Specifically, the
association between the easing of global monetary and liquidity conditions on the one hand, and the significant spurt in inflation, on the other, in recent
times is probed to conclude that across the world, there seems to be an association. The issues of monetary stability, price stability and financial stability are also intimately interlinked.

Some Contemporary and Classical Issues of Money and Finance

Post the pandemic, the world seems to be back on a high-inflation path, and many geographies in the advanced world have started witnessing inflation rates that were prevalent in the early 1970s.

Why Does Extralegal Finance Survive?

Debt, Trust, and Reputation: Extra-legal Finance in Northern India by Sebastian Schwecke, Cambridge: Cambridge University Press, 2022; pp 372, price not stated (hardcover).

An Evaluation of Factors Affecting the Usage of Financial Services in Punjab

This paper focuses on the usage of accounts to avail various financial services under the financial inclusion drive by the Government of India. It examines the factors affecting the use of financial services by 500 respondents from three districts of Punjab, namely Jalandhar, Gurdaspur, and Sangrur. It investigates financial services such as deposits, withdrawals, loans, remittances, and insurance. It applies logistic regression to understand the factors affecting the usage of these services. Education was the most significant of these factors, indicating the need for promoting financial literacy among the masses, especially those who are marginalised.

Bank-like Regulations for Non-banking Financial Companies

The purpose of this article is to address some of the lacunae in the scale-based framework proposed by the Reserve Bank of India in a discussion paper on non-banking financial companies that have turned a blind eye to the growth aspect and recognising only the stability by minimising the possibility of systemic risk. In this context, the introduction of pyramid-based structure of NBFCs is found to be lacking a common parameter for classification of companies in different layers. Further, the revision of threshold asset size limit for identifying systemically important non-deposit taking NBFCs from `500 crore to `1,000 crore is found be undervalued, which will result into making the smaller asset sized NBFCs subject to stricter prudential norms.


Development Banks and the Changing Contour of Industrial Credit in India

The gradual evolution of industrial credit in India in the last three decades is examined against the backdrop of significant structural change in ownership and regulation in the Indian banking sector. The impact of institutional changes in the Indian banking sector during the post-liberalisation phase, especially in the form of the gradual winding up of development financial institutions, on the institutional credit flow to industry is analysed. There is a significant impact of the changing ownership structure of banks on the sectoral allocation of credit. Based on the analysis of sectoral credit flow from the commercial banks and specialised term-lending institutions in India over the last three decades, the need for creating a professional talent pool within the commercial banks for term-lending as well as lending to small entrepreneurs is underscored.



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