Private credit to emerge as key growth engine for India's economy: Industry leaders
Mumbai, July 9
India's private credit market is set for sustained expansion over the coming years, driven by growing awareness, regulatory support, digital innovation and rising demand for alternative financing, industry leaders said on Thursday.
Speaking to IANS on the sidelines of IVCA Private Credit Summit 2026 here, they said private credit is emerging as a mainstream asset class that complements traditional bank lending, particularly for startups, MSMEs and mid-market businesses seeking flexible funding solutions.
Monu Jain, Partner at Aavishkaar Capital and Co-Chair of the Private Credit Council at IVCA, said one of the summit's primary objectives is to increase awareness about private credit, which remains a relatively small segment despite its strong growth trajectory.
"The summit brings together funds, investors and other ecosystem participants to understand the different forms of private credit, who it serves, how borrowers can prepare for it and the various facilitators that support the ecosystem," she said.
IVCA President Rajat Tandon said private credit has become an important financing option as startups and growth-stage companies increasingly seek debt financing instead of diluting equity.
He explained that while banks traditionally rely on collateral-based lending, venture debt and private credit provide flexible funding alternatives for businesses at different stages of growth.
"Right up to, you know, where investments you saw in real estate, nearly about 40 per cent of the investments today in the country are through private credit. Coming to my very next question, as we know that RBI has a tweak to certain norms in terms of private lending," he told IANS.
Discussing digitalisation, he said improved access to information through digital platforms is making financing more efficient, especially for MSMEs. However, he emphasised that stronger cybersecurity measures, data protection and responsible use of digital information will remain critical as the ecosystem evolves.
Karthik Athreya, Managing Director at Sundaram Alternates, described private credit as an emerging asset class that is gradually becoming part of mainstream investment portfolios.
"I think private credit is more of an emerging asset class, which is slowly becoming part of mainstream investment for investors, particularly in the country," Athreya told IANS.
Unlike conventional fixed-income products such as bank fixed deposits or debt mutual funds, he said private credit has the potential to generate double-digit returns.
— IANS
Reader Comments
Finally, private credit getting the attention it deserves! As someone who works with MSMEs, I can tell you—access to flexible debt without giving up equity is a game changer. The double-digit returns mentioned are attractive, but we need better awareness among small business owners about the terms.
Interesting to see this shift in India. In the US, private credit has been booming for years. The digitalization angle is key—India's UPI and fintech ecosystem could make this even more efficient. Just hope the cybersecurity measures keep pace.
Private credit as an asset class is promising, but I have concerns. Many investors don't fully understand the risks compared to FDs or mutual funds. The RBI needs to ensure proper disclosure norms. Also, 40% in real estate through private credit? That seems high—hope there's no bubble building.
As a small business owner, this gives me hope! Bank loans are a nightmare with all the paperwork. If private credit can offer faster, more flexible options for MSMEs, it could really boost our economy. Just hope the interest rates are reasonable—double-digit returns for lenders might mean high costs for borrowers 😅
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