India’s Private Credit Market Dominated by Domestic Funds

Domestic funds significantly propelled India’s private credit market in the first half of 2026, capturing the majority of both deal value and transaction volume. This surge highlights a critical shift towards increased local capital involvement in the nation’s financial landscape.

Key Market Figures in H1 2026

• Domestic funds secured 74% of the deal value.
• They also accounted for nearly 79% of the transaction volume.
• Total investments reached $3.5 billion, comparable to $3.4 billion in H2 2025.
• Over 100 transactions, each exceeding $10 million, were recorded.

This robust activity in private credit was primarily driven by several key financing needs across various sectors. Vishal Bansal, partner, debt and special situations at EY India, stated that the increasing involvement of domestic capital marks a crucial development.

Underlying Growth Drivers

• Refinancing existing debt for companies.
• Funding requirements for holding companies.
• Financing for corporate acquisitions.

The expansion of private credit is intrinsically linked to a sustained acceleration in demand for corporate financing. This trend is evident in the growth of traditional bank credit to industries.

• Bank credit to large industries surged from 4.6% in calendar year 2025 to over 14% in the first five months of 2026.
• Bank financing for Micro, Small, and Medium Enterprises (MSMEs) has consistently shown double-digit growth for four consecutive years.
• An ongoing capital expenditure cycle is expected to further stimulate the private credit sector’s growth.

An analysis of the sector-wise distribution reveals which industries attracted the most private credit in the first half of 2026. Real estate dominated, reflecting specific financing gaps within the sector.

Top Sectors for Private Credit

• Real estate constituted the largest share at 35% of deal value.
• Healthcare followed, accounting for 13%.
• The food and beverage sector saw a sharp increase to 12%, up from just 1% in the second half of 2025.

Real estate is projected to maintain its prominent role in private credit, particularly for financing land acquisition and pre-approval stages where traditional bank and Non-Banking Financial Company (NBFC) funding is often limited. Additionally, infrastructure, renewables, and energy sectors are anticipated to emerge as significant themes due to their escalating capital requirements.

While global funds are expected to retain their lead in large-ticket transactions given their capacity for substantial investments, domestic funds are increasingly poised to engage through co-investment strategies, signaling a collaborative future for India’s private credit landscape.