Private credit investments in India hit a record high last year, jumping 35 percent to $12.4 billion across 166 deals, even as activity slowed in the second half. This growth highlights how companies are turning to non-bank lenders for funding when traditional banks fall short, especially in sectors like real estate and healthcare. The surge comes amid stable interest rates and gaps in bank financing, making private credit a go-to option for refinancing, acquisitions, and expansion projects. Experts point to strong domestic demand and a maturing market as key drivers behind this boom.
Record Deployment Amid H2 Slowdown:
Deal activity began strongly in the first half of 2025 but slowed later, with the full year closing at $12.4 billion, up from $9.63 billion in 2024. In the second half alone, deployments totalled $3.4 billion over 87 deals worth more than $10 million, surpassing the $3.3 billion recorded in the same period last year. Vishal Bansal, a partner for debt and special situations at EY India, highlighted that while H2 experienced a slowdown following a strong H1, the overall 35% year-on-year value rise shows the market’s durability.
This performance bucks global uncertainties, fueled by India’s solid economic fundamentals and persistent need for alternative financing. More than 35 percent of H2 capital went toward refinancing, acquisition financing, and capital expenditure, signaling companies’ focus on balance-sheet fixes and growth bets. Large deals over $100 million made up just 9 percent of the transaction count but captured nearly 36 percent of the total value, highlighting how mega-transactions drive the numbers. Domestic private credit funds stepped up significantly in H2, capturing over 64% of deal value and 69% of volume, surpassing global players and showing the domestic ecosystem’s expanding muscle.
Banks and non-banking financial companies (NBFCs) ramped up lending too, with bank credit growth hitting around 12 percent year-on-year and NBFC lending surging over 21 percent in infrastructure and wholesale areas. Still, private credit carved out its niche by handling complex refinancings and selective capex needs that banks often sidestep. Dinkar Venkatasubramanian, partner and leader for debt and special situations at EY India, called private credit a “critical role” player in this landscape, now a staple in India’s credit mix.
Real Estate and Healthcare Lead Borrower Pack:
Real estate contributed for the lion’s share (42 percent) of overall deal value, followed by healthcare and industrial items (15 percent each). These industries confront recurrent funding constraints from banks due to risk profiles or regulatory hurdles, driving them to private credit’s flexible terms and faster approvals. Stable interest rate outlooks increased confidence among property developers and hospital organizations seeking expansion.
Healthcare’s rise is linked to India’s search for greater medical infrastructure, with private lenders filling gaps created by conservative bank regulations. Industrial products benefited from capex demands as firms prepared for increased output. The report highlights how these locations benefited from “structural funding gaps,” with private loans offering better yields to investors while providing borrowers with specialized solutions.
Spotlight on Mega Deals Changing the Market:
Standout transactions in H2 showed scale and strategy. A PharmEasy group business raised $193 million in refinancing, relieving debt pressures despite the pharmaceutical aggregator’s recovery efforts. Shapoorji Pallonji Group’s business secured $183 million on identical terms as part of a larger group building and engineering strategy. GMR Group has secured $182 million to repay existing loans and invest in new projects, showing the attraction of infrastructure.
All of these big purchases, which total more than $100 million, are prime examples of how private lending meets demanding requirements that banks avoid. Although not included in some totals, H1’s own blockbuster, which saw $3.1 billion raised by Porteast Investments, a Shapoorji Pallonji arm, set the tone for the year’s craze and showed the market’s tendency for exceptions. Such actions not only supported overall numbers but also attracted additional domestic managers who were willing to wager on India’s success.
Why Private Credit’s Star Keeps Rising:
The attraction of private lending comes from its advantage over banks: faster execution, customized structures, and a willingness to take risks such as mid-market or opportunistic wagers. Investors enjoy the higher returns in a low-interest world, while borrowers avoid long bank approvals. The H2 trend toward domestic funds shows the emergence of a homegrown ecosystem, with local platforms becoming sophisticated enough to compete with globals.
Experts predict that if interest rates remain low and economic tailwinds persist, momentum will continue. Bank lending will expand, but private credit’s supporting role in refinancing ($3.4 billion H2 deployments show this) and growth funding is set in stone. This $12.4 billion milestone strengthens India’s position as a private credit hotspot, combining global money with local expertise to drive real-world gains. As Bansal stated, the market’s “steady expansion” shows strong investor trust and borrower reliability.
