What a Real Credit Crackdown Looks Like

An emerging-market economy with a population of over a billion is recording its slowest growth rates in years, triggered by a crackdown on rampant nonbank lending. No, not that one.

India is demonstrating how a sharp squeeze on shadow finance— credit from outside traditional banking—can feed quickly through to an economic slowdown when the crackdown hits multiple key sectors at once. Other countries, particularly India’s large and credit-driven neighbor to the northeast, should take heed.

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