India's private credit market is poised for sustained growth over the coming years, fuelled by rising awareness, regulatory tailwinds, digital innovation, and surging demand for alternative financing, industry leaders said at the IVCA Private Credit Summit 2026 in Mumbai on 9 July 2025. Speakers at the summit described private credit as an increasingly mainstream asset class that complements traditional bank lending, particularly for startups, MSMEs, and mid-market businesses seeking flexible funding solutions.

Key Developments at the Summit

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 expand 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 noted that private credit has become a critical financing option as startups and growth-stage companies increasingly opt for debt financing over equity dilution. He highlighted that while banks traditionally rely on collateral-based lending, venture debt and private credit offer flexible alternatives for businesses at varying stages of growth.

Scale and Regulatory Context

Tandon pointed to the scale of private credit's penetration in certain segments, noting that nearly 40 per cent of investments in real estate today flow through private credit channels. He also acknowledged that the Reserve Bank of India (RBI) has recently adjusted certain norms related to private lending, signalling evolving regulatory engagement with the sector. The intersection of regulatory reform and rising deal flow is widely seen as a defining factor for the asset class going forward.

Digital Innovation and MSME Access

Tandon emphasised that improved access to information through digital platforms is making financing more efficient, especially for MSMEs. However, he cautioned that stronger cybersecurity measures, robust data protection frameworks, and responsible use of digital information will remain critical as the ecosystem scales. The balance between digital enablement and risk management, he argued, will shape the quality of growth in private credit.

Private Credit as a Mainstream Investment Class

Karthik Athreya, Managing Director at Sundaram Alternates, described private credit as an emerging asset class gradually entering 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 said. Unlike conventional fixed-income products such as bank fixed deposits or debt mutual funds, private credit has the potential to generate double-digit returns, he added.

What Comes Next

Industry participants expect the private credit market to deepen as regulatory clarity improves and more institutional investors allocate to the asset class. The growing appetite among startups and MSMEs for non-dilutive financing, combined with digital infrastructure improvements, is likely to accelerate deal volumes. How the sector navigates cybersecurity risks and evolving RBI guidelines will be closely watched in the months ahead.