6 days ago
India’s Family Offices Weigh Private Credit’s Returns Against Risk
Some wealthy families in India are lending money directly to businesses and projects.
This is called private credit.
They may earn 12%–18% returns, but those returns are not guaranteed.
The borrower might have trouble paying the money back.
Investors may also have to wait two to five years to get their money back.
Property or other assets may support a loan, but selling them can still take a long time.
Real estate makes up a large share of these deals.
Private credit can provide income without depending as much on stock prices.
Investors need to understand the borrower, collateral, risks and fund manager before investing.
Private-credit structures in India delivered reported returns of 12%–18% in 2024–25.
Indian family offices are increasing exposure to private credit and other alternative investments.
Private credit can provide income and lower correlation with stock markets, but involves credit and liquidity risks.
Real estate accounted for 41.9% of private-credit deals in the second half of 2025.
Typical private-credit lock-ins range from two to five years, making exits difficult.
- Who
- Indian family offices, private-credit funds, borrowers and fund managers; views were provided by Amitabh Lara and Sanjiv Bajaj.
- What
- Family offices are increasing their use of private credit, attracted by reported returns of 12%–18% but facing credit, concentration, liquidity and recovery risks.
- Where
- India.
- When
- The cited returns relate to 2024–25; real estate accounted for 41.9% of deals in H2 2025.
- Why
- Private credit is gaining ground because some businesses and projects need flexible financing that traditional lenders may not provide.
Potential Benefits
Risk Concerns
Portfolio role
Potential Benefits
Private credit can add income, provide asset-backed exposure and reduce dependence on stock-market movements.
Risk Concerns
Lower market correlation does not make the investment safe; borrowers can default and capital may remain locked in.
Financing opportunity
Potential Benefits
Private lenders can provide flexible, customised capital to businesses and projects that do not fit traditional bank criteria.
Risk Concerns
The borrowers may carry greater credit risk, and the higher return may simply compensate investors for taking that risk.
Collateral protection
Potential Benefits
Loans backed by land, properties, receivables or future project cash flows may offer additional protection.
Risk Concerns
Collateral values can fall, legal or market issues can delay sales, and recovery is not guaranteed or necessarily quick.
Key facts
- Reported return range
- 12%–18% across private-credit structures in India in 2024–25
- Typical fund yield
- Private-credit funds can typically earn around 12%–14%, according to Amitabh Lara
- Typical lock-in
- Approximately two to five years
- Largest deal sector
- Real estate represented 41.9% of private-credit deals in H2 2025
- Other leading sectors
- Healthcare and conglomerates each accounted for 15.1% of deals in H2 2025
- Family-office assets
- Mid- and large-sized Indian family offices managed about Rs 70,000 crore in 2024
- Key risks
- Credit, borrower concentration, illiquidity, default and recovery risks
Quotes
Sanjiv Bajaj
Joint Chairman and Managing Director of Bajaj Capital
“Different doesn’t automatically mean safer”
financialexpress.com
Sources
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