National, 13th February 2025: The evolving landscape of private credit in India was a key focus at the IVCA Conclave 2025, with industry leaders discussing its growing significance, challenges, and potential to become a mainstream asset class. The session, Private Credit: Expanding from Niche to Norm in India, explored how private credit is evolving beyond its niche status, the increasing interest from institutional investors, and the regulatory landscape shaping its future. Panelists examined how alternative lending structures can fill gaps left by traditional bank financing, particularly in real estate, infrastructure, and high-growth sectors.
Private credit has seen a significant rise in investor interest, with cumulative investments reaching ₹1.23 lakh crore as of September 30, 2024, and commitments raised at ₹1.84 lakh crore. The panel explored the long-short dynamics of private credit funds, regulatory frameworks influencing fundraising, and the role of innovation in shaping new product offerings.
During the session, Rubin Chheda, Managing Director, Neo Asset Management stated, “Private credit in India remains niche, accounting for only 1.3-1.4% of total bank and corporate debt exposure—far behind the U.S., where it constitutes 11-12% of the overall debt market. While the U.S. sees highly structured deals with leverage up to 6x, in India, leverage is typically limited to 3-4x. Unlike global markets where leveraged buyouts (LBOs) dominate, India’s private credit landscape is constrained by regulatory structures that limit the free flow of capital across entities, making deal structuring more complex.”
Anant Khatri, Executive Director (Private Credit Investments), Avendus, emphasized “Private credit plays a crucial role in addressing financing gaps in sectors where traditional lending models are ineffective. Real estate remains one such sector, where every project requires a unique assessment based on location, sales velocity, and pricing viability. Over the past 15 years, private credit in real estate has evolved from being dominated by specialized NBFCs to now being driven by large alternative investment funds. Private credit provides essential short-term capital solutions, helping bridge financing gaps for businesses in need of flexible funding options.”
Adding to the conversation, Monu Jain, Partner, Credit, Aavishkar Capital, discussed the emerging role of blended finance in private credit,“Blended finance is emerging as a powerful tool to attract private capital at lower risks and costs. Public capital, including funds from development finance institutions and multilateral agencies, can act as catalytic capital through grants, concessional loans, and guarantees. ESG-focused private credit remains a niche within a niche. Despite over $700 billion being allocated globally to sustainability finance in the past decade, private credit accounts for only $50 billion of that. A key challenge is the perception that sustainable private credit investments come at the cost of either higher risk or lower returns.”