India’s private-credit market is becoming a more important part of the country’s financing ecosystem.
According to EY’s latest Private Credit in India: H1 2026 update, private-credit investments reached approximately US$3.5 billion across 102 transactions above US$10 million during the first half of 2026. Domestic funds accounted for 74% of deal value and approximately 79% of deal count.
For investors, however, growth in the asset class should not automatically translate into a search for the highest available yield.
The more important question is:
What risk is the yield compensating you for?
What Happened?
Private credit provides companies with capital outside traditional public bond markets or conventional bank loans.
EY’s H1 2026 data shows that the Indian market remained active, with mid-sized transactions becoming particularly important. Deals between US$10 million and US$60 million represented around 61% of total deal value and 87% of deal count.
Real estate remained the largest sector by deployment, accounting for around 35% of deal value, followed by healthcare at 13% and food & beverage at 12%.
This suggests that private credit is moving beyond a niche financing product and becoming a broader source of structured capital for Indian businesses.
Why Does This Matter to Investors?
Because private credit can look deceptively simple.
An investor may see:
Higher yield → attractive income opportunity.
But the real structure may involve:
credit risk + illiquidity + leverage + security structure + recovery risk + longer holding periods.
Unlike a frequently traded listed bond, private-credit positions may not have an easy secondary-market exit.
That makes underwriting particularly important.
4 Things Investors Should Evaluate
1. Why Does the Borrower Need Private Credit?
The first question should not be:
“What is the coupon?”
It should be:
“Why is this company borrowing through private credit?”
Capital may be required for acquisition financing, refinancing, expansion, project financing or special situations.
Each purpose carries a different risk profile.
2. What Protects the Lender?
Investors should understand whether the facility is:
secured, unsecured, senior, subordinated or structurally complex.
Collateral may provide additional protection, but collateral alone does not eliminate default or recovery risk.
3. How Easy Is the Exit?
Private credit is generally less liquid than publicly traded debt.
That means investors should understand:
- expected tenure
- repayment structure
- refinancing dependence
- early-exit possibilities
- conditions that could delay repayment
A high headline yield can lose its appeal if liquidity is needed unexpectedly.
4. Is the Yield Actually Enough for the Risk?
A higher yield normally exists for a reason.
It may compensate investors for:
lower liquidity, weaker credit quality, complex structures, concentration or execution risk.
The relevant comparison is therefore not simply:
12% vs 9%.
It is:
Risk-adjusted return versus available alternatives.
What Should Investors Understand?
The growth of private credit is not necessarily a signal to invest in every opportunity.
It is a signal that investors increasingly need to understand credit underwriting, not just yield.
As domestic funds become more active in the segment, investment opportunities may continue to expand. EY reported that nearly 73% of surveyed private-credit investors expect market activity to remain strong over the next one to two years.
More opportunity, however, also means more need for selectivity.
Ranjit Jha’s Perspective
For investors evaluating alternative investments, the useful principle is simple:
Income should never be evaluated separately from the risk required to earn it.
From Rurash MD & CEO Ranjit Jha’s investor-education perspective, private credit should be assessed within the broader portfolio—considering liquidity requirements, risk tolerance, investment horizon and concentration—not merely the headline yield.
The role of private credit should be clear before capital is committed.
Explore More With Rurash
Rurash Financials helps investors evaluate investment opportunities across AIFs, private-market strategies, fixed income and broader wealth solutions.
Before adding an alternative-credit allocation, understand:
the borrower • the structure • the security • the liquidity • the exit.