Private Credit in India Set for Strong Growth as Real Estate Drives H1 2026 Deals

New Delhi, August 21, 2026; India’s private credit ecosystem is expected to maintain its momentum over the next one to two years, with investors continuing to see opportunities across sectors despite intensifying competition and an uncertain global economic environment.

According to an EY survey, private credit investments in India reached USD 3.5 billion during the first half of 2026. Domestic investment platforms played a dominant role, contributing 74 per cent of the overall deal value and nearly 79 per cent of the total number of transactions.

Real estate remained the biggest contributor to private credit activity, accounting for 35 per cent of total deal value during H1 2026. Healthcare followed with a 13 per cent share, while the food and beverage industry recorded a sharp rise in activity to emerge as the third-largest sector, representing 12 per cent of deal value.

The expansion of private credit has been supported by resilient domestic economic conditions, stronger banking fundamentals and continued growth in lending. The banking sector entered FY27 with improved asset quality and substantial capital buffers, providing greater support to overall credit availability.

The Capital to Risk-weighted Assets Ratio of scheduled commercial banks rose to 17.7 per cent by March 2026 from 17.4 per cent a year earlier. During the same period, the Common Equity Tier 1 ratio improved from 14.8 per cent to 15.3 per cent.

Banks also reported comparatively strong profitability, with return on assets at 1.3 per cent and return on equity at 12.6 per cent. Meanwhile, the gross non-performing asset ratio declined to 1.8 per cent and the net NPA ratio dropped to 0.4 per cent in FY26.

The EY survey indicated continued optimism among market participants. Around 60 per cent of respondents said they expected India’s private credit market to perform strongly over the coming one to two years, although greater competition among lenders is anticipated.

Investment demand is being driven by several factors, including companies seeking funds for capital expenditure, businesses facing financial stress and borrowers looking for financing for mergers and acquisitions. The growing preference for structured and flexible funding solutions has also contributed to the expansion of the market.

Despite its strong transaction activity, real estate remains an area of caution for private credit investors, with respondents identifying it as the sector carrying the highest perceived risk of default.

Overall, the survey suggests that India’s strong domestic fundamentals and evolving financing requirements could keep private credit activity on an upward trajectory, even as global geopolitical and trade-related uncertainties continue to influence investor sentiment.