Archive · 30 Jan 2026
India's Private Credit and Equity Markets Evolve
India's private credit market is growing fast, with lots of money coming in from both foreign and domestic investors.
This market helps mid-sized companies that can't get loans from banks.
At the same time, foreign investors are putting more money into mid- and small-cap stocks, while domestic investors are focusing on large-cap stocks.
Promoters are slowly selling their shares, and the market is becoming more institutionalized.
This means better governance and more liquidity, especially in mid- and small-cap segments.
The equity market is also seeing big changes, with investors moving money between different sectors.
Telecom is getting a lot of attention, while utilities are seeing less investment.
Overall, the market is becoming more balanced and structured.
India's private credit market grew rapidly, reaching US$9 billion in the first half of 2025, a 53% increase from the same period in 2024.
The market is driven by the financing gap for mid-sized companies and the strengthening of institutional frameworks like the Insolvency and Bankruptcy Code (IBC).
Global funds dominate the market (68%), with domestic funds making up the remaining 32%, focusing on mid-market corporate lending.
Investors are attracted to the market for diversification, inflation hedge, and predictable returns ranging from 12% to 20% pre-tax.
Regulatory changes, such as the Finance Act 2023 and the Finance Bill 2025, have supported the growth of the private credit market.
- Who
- Investors, including global funds, domestic funds, high net worth individuals, corporates, family offices, institutions, development finance institutions, sovereign funds, pension funds, FIIs, DIIs, promoters, and public shareholders
- What
- Growth in India's private credit market and structural rebalancing of equity market ownership
- When
- As of the first half of 2025 and December 2025
- Where
- India
- Why
- Due to the financing gap for mid-sized companies, strengthening of institutional frameworks, attractive returns, and sectoral churn in equity markets
- Market Size
- 0.6% of India's GDP
- Private Credit Deployment (H1 2025)
- US$9 billion
- Growth (H1 2025 vs H1 2024)
- 53%
- Global Funds' Share
- 68%
- Domestic Funds' Share
- 32%
- Typical Returns
- 12% to 20% pre-tax
- Investor Types
- High net worth individuals, corporates, family offices, institutions, development finance institutions, sovereign funds, pension funds
- Regulatory Enabler
- Finance Act 2023 and Finance Bill 2025
- FII Midcap Exposure (Dec 2025)
- 16.4%
- FII Smallcap Exposure (Dec 2025)
- 14.2%
- FII Largecap Exposure (Dec 2025)
- 25.5%
- DII Ownership Trend
- Steadily climbing since FY20
- Promoter Stake Reduction
- Gradual since FY23, sharper in mid- and small-caps
- Public Shareholding Trend
- Plateaued to mildly lower levels