India’s structural edge as global private credit markets shift

Highlights

• India’s private credit market, estimated at ~USD 25 bn, has evolved into a meaningful alternative capital pool within the broader financing ecosystem.
• The market has seen increasing institutional participation, larger fund sizes and a widening opportunity set across sectors.
• India’s private credit market operates within a meaningfully different structural and regulatory framework compared to more mature markets such as the US.
• Private credit in India remains institutionally oriented, with limited retail participation and tighter controls around leverage and fund structures.
• India’s private credit market remains positioned for growth, supported by underwriting anchored by hard collateral, visible cash flows and stronger structural safeguards.

Positioning India in a shifting landscape

India’s private credit market, estimated at ~USD 25 bn, has evolved into a meaningful alternative capital pool within the broader financing ecosystem. Over the past few years, the market has seen increasing institutional participation, larger fund sizes and a widening opportunity set across sectors.

While evaluating the performance of the Indian private credit market, it is imperative to overlay the global private landscape and understand the structural differences between private credit in India and mature markets.  

Recent developments in global markets

Global private credit markets, estimated at around USD 3 tn, have come into sharp focus following a series of events that point to emerging stress within the system.

In February 2026, Blue Owl Capital restricted investor withdrawals from its retail-focused OBDC II fund while also selling USD 1.4 bn in loan assets across three funds. BlackRock imposed limits on investor withdrawals from its USD 26 bn HPS Corporate Lending Fund, while Morgan Stanley restricted redemptions in its North Haven Private Income Fund. Some managers went further in March 2026 to accommodate investor exits. Blackstone allowed redemption of 7.9% of shares in one of its Business Development Companies, partly by injecting USD 150 mn of cash from its staff. Oaktree Capital Management permitted 8.5% of investors to exit one of its funds, with a portion of payouts supported by capital from its parent firm, Brookfield.

These are not isolated instances. They reflect a broader set of concerns, including high exposure to the software sector, where potential disruption from AI is a cause of concern. This is compounded by external factors such as geopolitical tensions in the Middle East, the possibility of economic slowdown and a corresponding rise in loan defaults.

More fundamentally, structural vulnerabilities are becoming evident. These include multi-layered leverage across borrowers, fund structures and in some cases investors; the prevalence of semi-liquid vehicles that allow partial redemptions despite investing in illiquid assets; and a gradual dilution in covenants alongside weakening underwriting standards.

India vs. US private credit 

While developments in global markets warrant attention, extrapolating those conditions directly to India may not be entirely appropriate. The Indian private credit market operates within a meaningfully different structural and regulatory framework compared to more mature markets such as the US.  

Private credit in India remains institutionally oriented, with limited retail participation and tighter controls around leverage and fund structures.
 

Looking ahead

Global developments are bringing structural differences in private credit into sharper focus. India’s private credit market remains positioned for growth, supported by clear regulatory and structural differences from more mature markets.

At the same time, competitive intensity is rising. As fund sizes increase, the ability to sustain returns without diluting underwriting standards will become the key differentiator.