Daybreak From Manipal to Shapoorji, India's private credit party is just getting started. But trouble is brewing
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Jul 8, 2025 India's private credit market is booming with massive deals like Deutsche Bank's $3.4 billion package and KKR's loan to Manipal. However, beneath the excitement, pressures are mounting as interest rates drop and competition increases, tightening yields. The landscape is further complicated as traditional banks reconsider lending to companies, shifting their focus back from non-bank lenders. The impact of risky borrowing practices and evolving regulations makes this a crucial time for the sector.
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India's Growing Private Credit
- India's private credit sector is growing rapidly despite global concerns about its risks.
- Its size remains small relative to GDP, but activity and deals are increasing fast.
Yield Pressure Risks in Private Credit
- Falling interest rates and increasing competition are squeezing private credit yields.
- This pressure could lead to mistakes as lenders compete for deals.
Changing Dynamics in Private Credit Deals
- Private credit funds thrived post-2016 due to insolvencies but large deals are now fewer.
- Domestic players have increased market share while returns are starting to decline.