Private credit becomes India’s next powerful engine of economic growth

BEYOND BANK LENDING | New-age lenders transform evolving corporate funding 

IANS mumbai

India's private credit market is set for sustained expansion over the coming years, driven by growing awareness, regulatory support, digital innovation and rising demand for alternative financing, industry leaders said on Thursday.

Speaking to IANS on the sidelines of the India Venture Capital Association (IVCA) Private Credit Summit 2026 in Mumbai, they said private credit is emerging as a mainstream asset class that complements traditional bank lending, particularly for startups, MSMEs and mid-market businesses seeking flexible funding solutions.

Monu Jain, partner at Aavishkaar Capital and co-chair of the Private Credit Council at the IVCA, said one of the summit's primary objectives is to increase 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," Jain said.

IVCA President Rajat Tandon said private credit has become an important financing option as startups and growth-stage companies increasingly seek debt financing instead of diluting equity. He explained that while banks traditionally rely on collateral-based lending, venture debt and private credit provide flexible funding alternatives for businesses at different stages of growth.

‘Pvt credit industry can become $100 bn by 2050’

India's private credit industry has the potential to expand to $100 billion by 2050 from the current $25-30 billion, National Pension System (NPS) Trust Chairperson Dinesh Kumar Khara said on Thursday.

This growth will be driven by the growing maturity of the ecosystem and expanding domestic capital pools, the former SBI chairman said.

"Perhaps it can become a $100 billion industry at least by the year 2050. That is what my expectation is," Khara said.

He said the private credit industry contributes only about 0.6% of the country's GDP but has witnessed strong growth in recent years as industry participants mature.

Khara said the expansion is being supported by the rapid growth of family offices and UHNIs looking at alternative asset classes, along with a widening pool of capital.

"The industry players are maturing. When it comes to the kind of pool of capital which is available, even that is getting enlarged," he said.

He also said the financial sector thrives on trust and the private credit industry, being relatively new, would need to continue earning the confidence of investors and regulators through responsible conduct as it scales up.