Domestic funds seize 74 per cent of India's private credit market as investors turn bullish on growth

New Delhi [India], September 6 (ANI): India’s private credit market is likely to remain on a growth trajectory over the next one to two years, even as competition among lenders intensifies, with domestic funds increasingly expected to drive deployment and target larger transactions, according to a research report by EY.

The shift is already visible in the first half of 2026. Private credit deals tracked by EY totalled US$3.5 billion in H1 2026, marginally higher than US$3.4 billion in the second half of 2025. Domestic private credit players accounted for 74 per cent of total deal value and around 79 per cent of deal count, significantly strengthening their position against global funds.

EY said domestic funds are benefiting from their local presence and access to mid-market borrowers and are increasingly participating in larger transactions as well. Global funds’ share of private credit deal value fell to 26 per cent in H1 2026 from 36 per cent in H2 2025 and 68 per cent in H1 2025.

The market’s underlying demand remains broad-based. Refinancing, real estate project funding, HoldCo funding and acquisition financing were among the key purposes for which private credit was deployed during the period. EY’s private credit pulse survey also found that stress-related situations, capital expenditure and M&A financing were emerging as important sources of demand.

Investor sentiment remains constructive. EY’s survey showed 60 per cent of respondents were bullish on private credit over the next one to two years, while another 13 per cent were very bullish and 27 per cent were cautious.

Sectorally, real estate remained the largest recipient, accounting for around 35 per cent of deal value, followed by healthcare at 13 per cent and food and beverages at 12 per cent. Food and beverages gained particular momentum during the period.

With domestic funds gaining scale, a deeper deal pipeline and demand for flexible financing solutions, EY expects private credit to remain an important component of India’s evolving credit ecosystem, although lenders will need to navigate rising competition and selective risk-taking. (ANI)

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