India's private credit market has nearly doubled to $25 billion in assets under management over the past five years, with Moody's Ratings projecting the market could reach $50 billion by FY30. According to Moody's, the market is positioned for sustained growth as rising corporate financing needs and constraints on traditional lenders drive demand for alternative capital. The report shows that maintaining its recent growth trajectory would take the market to about $50 billion by FY30, driven by escalating corporate funding needs and limitations faced by traditional banks. As reported by Moody's, private credit in India is increasingly becoming a popular alternative to traditional loans, with credit demand strong amid infrastructure development needs in a relatively stable macroeconomic environment. The market has grown rapidly to more than $11 billion in annual transaction value in 2025 and continues to expand significantly.
Real estate private credit funds are anticipating rising refinancing demand over the next 12 months as residential sales moderate after a strong multi-year run, with developers increasingly turning to structured debt to manage cash flows and rebalance their balance sheets. According to The Hindu BusinessLine, Vikas Chimakurthy, CEO – Realty Funds at Kotak Alternate Asset Managers, stated that "We see the need for refinancing capital to increase in the next 12 months because of reduction in residential sales volume." He noted that most private credit deployed over the last two years has gone towards land acquisition and growth, with only a part used for refinancing to address cash-flow mismatches. The expected rise in refinancing represents a strategic shift rather than distress-led lending, with Saurabh Rathi, Co-head, Real Estate Funds at Motilal Oswal Alternates, explaining that "The recent softer residential sales have resulted in deal pipelines going up by 10 to 20 percent across the market as builders choose flexible capital over waiting on customer collections."
The Reserve Bank of India's new acquisition financing norms, effective July 2026, will intensify competition from banks in India's private credit market, according to Moody's Ratings. The central bank has allowed banks to finance as much as 75% of the transaction value in corporate takeovers, marking a significant shift from the segment's historical dominance by alternative funds. While the new rules may benefit borrowers by lowering financing costs and increasing the availability of financing, they could compress yields and reduce deal flows for private credit providers in acquisition financing. As noted by Moody's, banks, which historically have been the primary financing source for companies, have tightened their lending criteria to preserve their asset quality, even though credit demand remains strong. However, the report adds that constraints on the lending capacity of banks and non-banking financial companies (NBFCs) may create opportunities for private credit funds. The segment has historically been dominated by alternative funds, but the new regulatory framework is expected to intensify competition in the acquisition financing space.
The private credit market is heavily concentrated in specific sectors, with real estate accounting for nearly 40% of total private credit value and infrastructure and utilities companies representing the largest portion. According to Moody's, borrowing by real estate and infrastructure companies, along with promoter financing, continues to account for a significant share of India's private credit market. Private credit funds are stepping in where conventional lenders have become more selective, offering tailored financing structures to borrowers with complex capital requirements. The market has evolved from a niche source of funding for distressed companies into an important financing avenue for healthy businesses seeking capital for expansion, acquisitions and refinancing, though it remains a fraction of the US market which manages more than $1 trillion in assets. Financing led by promoters across various sectors often for refinancing, liability management or stake acquisitions is another key part of the private credit market in India, as noted by Moody's.
The private credit market is witnessing a shift toward larger transactions as the funding pool expands. According to Moody's, currently, most private credit transactions are smaller than $100 million, with large, multibillion-dollar deals being sporadic and many for refinancing. However, the market is evolving with more large transactions expected as the pool of funds expands. Major transactions in recent years include GMR Group's nearly $1 billion fundraising from private credit investors, the Adani Group's $750 million bond issuance, and Apollo-managed funds' fully subscribed $500 million of senior secured notes backed by transmission assets of Adani Energy Solutions. The Shapoorji Pallonji Group's ₹28,600 crore financing, backed by its 9.18% stake in Tata Sons and real estate assets, represents India's largest private credit transaction, highlighting the growing appetite for large infrastructure financings. Despite remaining small by global standards, India's private credit market has significant headroom to grow, supported by expanding financing needs and the country's robust macroeconomic momentum.
International investors are increasingly participating in India's private credit market, with global alternative asset managers significantly expanding their presence in financing transactions involving infrastructure projects, renewable energy, real estate, acquisitions and corporate refinancing. According to Moody's, the investor base for India-focused private credit funds is diversified and will continue to broaden, with private credit funds sourcing capital from global and domestic asset managers; sovereign and quasi sovereign investors; family offices; and high-net-worth individuals. However, Moody's warns of potential liquidity risks, noting that some private credit structures allow partial early redemptions, which could create liquidity mismatches if investor withdrawals accelerate during market stress. The report cited the 2018 NBFC liquidity crisis as an example of how funding stress can spread quickly if liquidity management fails to keep pace with market growth. Additionally, Moody's highlights that withholding tax on interest income raises the all-in cost of offshore funding and, coupled with potential currency depreciation, can reduce returns for foreign investors, requiring higher nominal returns and focus on bespoke private credit transactions. The reforms in Gujarat International Finance Tec-City (GIFT City), the maiden International Financial Services Centre (IFSC), have provided a more favourable framework for cross-border financing.
