In this paper, we examine the extent to which small business lending responds to the changes in interest rates in India and South Africa, focusing specifically on the monetary transmission mechanism through bank lending. By utilising a panel dataset of commercial banks in both countries from 2010 to 2022, we estimate fixed effects regressions in order to identify the sensitivity of lending to policy rate shifts. Our analysis incorporates bank-specific characteristics, macroeconomic controls, and the interactions with monetary policy, in order to capture the heterogeneity in responses to lending. Our findings show that there are many differences in financial market structures, regulatory environments, and the credibility of central banks, given that we see how SME lending is significantly more sensitive to interest rate changes in South Africa than in India. We see that the lending for Indian SMEs appears to be less elastic, given that there is a combination of both, government-backed lending schemes and a large public-sector bank dominance. These results illustrate that there is an importance of having an institutional context in observing the effectiveness of monetary policy and also highlights the need for very specific, targeted policy interventions to improve SME credit access, especially in emerging markets.