Negative Spread rdquo sometimes seen in the news recently occurs ........

Economic Affairs Money Supply and Monetary Policy

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Negative Spread” sometimes seen in the news recently, occurs

when growth of a company/economy distributed across all sectors equally

when growth of a company/economy distributed across all sectors unequally

when interest rates charged on amounts lent are higher than interest rates paid on borrowed sums

when interest rates charged on amounts lent are lower than interest rates paid on borrowed sums

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Explanation:

Negative spread refers to the negative difference between the interest rate paid by a bank and the agreed upon basic interest rate.

A negative spread occurs when interest rates charged on amounts lent are lower than interest rates paid on borrowed sums.

A forensic audit report of IL&FS has found serious lapses in the manner in which huge loans were extended to certain entities even after internal risk assessment clearly showed that the borrowers were under financial stress.

Further, various instances have been found wherein the committee of directors of the infrastructure financing company extended loans at a negative spread to borrowers facing liquidity issues.