India Private Credit Deals Fall 61% To $3.5 Bn In First Half Of 2026

Private credit deployments in India fell 61% year-on-year to $3.5 billion in the first half of 2026, as a volatile macroeconomic environment weighed on deal activity, according to a report by consultancy firm EY.

The January-June 2026 deployment figure compares with $9 billion in the corresponding period of 2025. However, the report said that the year-ago number had been significantly boosted by a single $3.1 billion fundraise.

Activity in H1 2026 was marginally higher than the $3.4 billion recorded in the second half of 2025, it said.

Private credit typically caters to specialised financing requirements where banks and other regulated lenders may be unable or unwilling to provide conventional funding. The segment allows greater flexibility in structuring transactions and generally offers higher returns to lenders, albeit with greater risk.

Domestic private credit funds continued to dominate the market, accounting for nearly three-fourths of the total capital deployed during the six-month period, the EY report said.

The contribution of foreign funds, meanwhile, has continued to decline. Overseas investors accounted for 26% of total deployments in H1 2026, down from 36% in H2 2025 and 68% in H1 2025, it added.

Real Estate Is Largest Recipient

Real estate retained its position as the biggest destination for private credit despite concerns over risks associated with the sector. The industry accounted for 35% of total deployments in H1 2026, according to EY.

Healthcare followed with a 13% share, while food and beverages accounted for 12% of the capital deployed during the period.

Kalpataru's $176 million fundraise was the largest private credit transaction recorded in the first half of 2026, EY said.

Demand for private credit continued to be driven largely by stressed situations, capital expenditure needs and acquisitions.

EY said regulatory and external developments during the first half could also influence future private credit volumes. These included stronger bank credit growth, the Reserve Bank of India's decision to permit banks to undertake acquisition financing, and temporary incentives for external commercial borrowings.

Kotak, Avendus Lead Major Fundraises

EY said the report tracked publicly available information and disclosures gathered through surveys, and covered private credit transactions valued at more than $10 million each.

On the fundraising front, major transactions included $691 million raised by Kotak Alternate Assets Management under the Kotak Real Estate Fund, $496 million for the Kotak Yield and Growth Fund and $42 million for the Kotak Life Sciences Fund, according to EY.

Other significant fundraises included $290 million by Avendus' structured credit fund and $183 million by Motilal Oswal Alts' India Credit Excellence Fund.