Private Credit rise in India
In recent years, India’s private credit market has rapidly evolved from an emerging space into a mature and
vibrant asset class. Global investors have shown strong interest, while domestic investors have increased
their commitments to secure early-mover advantages in a high-growth environment. Supportive tax and
regulatory reforms have further strengthened investor confidence. Additionally, private credit has stepped in
to fill the gap left by nonbank financial companies that pulled back from distressed real estate lending.
Status of India’s Private Credit Market (Updated to Mid-2025)
India’s private credit market continues to strengthen, firmly establishing itself as a critical alternative
financing channel. Below is an updated snapshot of the market as of July 2025:
Sustained Growth Momentum:
The market remains on an accelerated growth path, supported by shifts in traditional bank lending, strong
economic expansion, and the increasing maturity of both borrowers and credit investors.
Growth of private credit
In 2021, when a major investment conglomerate faced a sharp decline in its stock price and portfolio
valuations, it secured over USD 5 billion through the private credit market.
More recently, private debt lenders extended a fully funded USD 5 billion direct loan to refinance a leading
FinTech company.
At the beginning of 2025, a global software firm announced its largest-ever debt raise—USD 5 billion—
structured through a mix of private credit and traditional bank financing. The package comprised an annual
recurring revenue (ARR) loan, a revolving credit facility, and a delayed draw term loan.
These multi-billion-dollar transactions underscore a brthe shift rather than isolated events. Once viewed as a
funding source primarily for short-term, smaller-ticket, non-investment-grade borrowers, private credit funds
have significantly expanded their capacity and influence.
Over the past two decades, private credit has emerged as a highly attractive investment avenue, with
momentum expected to remain strong in 2025. Within private credit strategies, direct lending dominated in
2024, accounting for over 75% of total capital raised (more than USD 150 billion). The next most popular
strategy was special situations, which raised approximately USD 25 billion.
Rise of private credit in India
In 2024, India became the fastest-growing economy in the G20, recording 7% GDP growth, driven largely by
strong domestic demand. Looking ahead, India aims to become the world’s second-largest economy by 2040,
supported by government-led reforms, infrastructure expansion, improved ease of doing business, and a
young, skilled talent pool. Real GDP growth for FY26 is projected to range between 6.3% and 6.8%.
Capital expenditure has shown steady improvement from FY21 to FY24, and in the period from July to
November 2024—following the general elections—CapEx grew 8.2% year-on-year. Exports also strengthened,
with total exports rising 6%, and services exports increasing 11.6% year-on-year during the first nine months
of FY25.
In 2024, Indian companies raised INR 11.1 lakh crore (USD 130 billion) through equity and debt markets, a 5%
increase over the previous year. India also reached a major milestone: cumulative gross FDI inflows crossed
USD 1 trillion since April 2000. This momentum continued with a 26% rise in FDI, reaching USD 42.1 billion in
the first half of FY25, underscoring India’s strengthening position as a global investment hub.
Despite recent FPI outflows, India remains highly attractive to foreign investors due to its robust economic
outlook. According to PwC’s 28th Annual Global CEO Survey: India Perspective, India ranked—for the second
year in a row—among the top five global investment destinations for CEOs aiming to expand revenue over
the next 12 months.
What factors are driving growth in India’s private credit market?
Rising fast from a low base
Compared with global markets, India’s private credit segment remains relatively small, with estimated assets
under management of USD 25–30 billion as of March 31, 2025. This accounts for roughly 0.6% of India’s GDP
and about 1.2% of total corporate lending.
Regulatory constraints fuel private credit growth
Certain RBI regulations—such as restrictions on bank lending for land acquisition in real estate—have shifted
borrowers toward private credit. As a result, real estate transactions account for over one-third of India’s
private credit market (EY, 2024).
Bank rules also prevent funding for equity contributions in acquisitions, pushing M&A financing toward
private credit, which constitutes ~35% of deals (PwC).
A notable example is IndusInd International Holdings, which used over INR 70 billion in private credit to
acquire Reliance Capital—leveraging flexible structures such as unencumbered subsidiary shares, customized
covenants, and IPO-linked exits.
