India being a bank-dominated economy, the bank credit becomes a key monetary policy  3  2  Y.V.Reddy (2011). BIS central bankers’ speeches  transmission channel. Thus, the aggregate bank credit growth has always formed an important variable in the conduct of monetary and countercyclical policies. Elements of macro-prudential framework in India Overview 8.
Thus, it can be argued that it is the combination of low real and nominal interest rates brought about by the lowering of inflation, accompanied by the abundance of liquidity induced by accommodative monetary policy which lies at the roots of the current crisis. In this sense, the sub-prime is a symptom rather than a cause.