Heightened investment variability and low yields are pushing investors towards identifying that private credit investments serve as a genuine alternative value proposition in a volatile market.
In the year 2025, the private credit market in India has seen accelerating growth, with deal volume in H1 2025 reaching a whopping USD 9.0 billion. This was a 53% increase from USD 5.9 billion in H1 2024, demonstrating escalating activity and expanding market liquidity, showcasing the transition of private credit from being a niche strategy to a rapidly expanding market.
But why is private credit in India growing so fast?
The answer is largely driven by tighter bank lending norms and a widening funding gap that has opened the doors for private lenders to step in. What makes private credit stand out from other viable options is that it delivers potentially attractive risk-adjusted returns. These investments are secured and hence tend to offer income that is steady and lower in risk compared to equity investments. For the past 23 years, private credit has demonstrated positive internal rates of return (IRR), proving its track record.
Private credit, in comparison to public markets, behaves differently. In the sense that these loans are customized and usually held until they mature. This can help diversify the investment portfolio, especially when bonds and stocks are volatile. The opportunity is quantifiable. Investors that are looking to invest in private credit would gain access to opportunities that provide protection against market swings.
How can an investor get started in private credit?
There are multiple ways to get into this growing market. Each method is tailored to different levels of involvement, investment size, and risk appetites.
Private Credit Funds
This is considered as one of the most common approaches. Private credit funds are professionally managed vehicles where capital is pooled by multiple investors to finance loans to corporates, real estate projects, or infrastructure ventures. With the investment of such funds, a diversified portfolio of private loans is created without needing to underwrite each deal yourself.
Hands-on approach
With a rise of over 75% secured in the direct-lending strategy within the private credit capital, this reinforces the fact that this approach remains a prominent strategy. These opportunities usually require deeper expertise and larger capital commitments and are suited for people who lean towards a more practical and direct approach. There are potentially higher returns and greater control, but it comes with the added responsibility for monitoring. The investors themselves, directly provide projects and companies with loans as well as the negotiation and interest rates.
Co-lending platforms.
In a structured, technology-driven environment, investors connect with carefully vetted borrowers, which is leading to the popularity of these platforms. In these platforms smaller investment amounts are permitted, which gives investors the chance to engage in private credit without committing to a significant capital. Digital platforms which connect banks, NBFCs, and handle operational requirements, are contributing towards the growth of co-lending.
Mezzanine financing
Sitting between debt and equity, this is the form of private credit that allows investors to gain higher potential returns than regular loans would. Some protection against losses is still maintained in this method. Secured, income-generating investments are accessible to investors by participating in this form of investment, which in turn leads to a diversified portfolio.
Our Approach
We believe that investing in private credit shouldn’t feel like a puzzle you can’t solve.
At Arbour, every opportunity and every loan structure is carefully assessed whilst keeping in mind risk-mitigated investments. We don’t just follow numbers, we look at the story behind each opportunity. Using the right approach, private credit has the potential to be more than just a simple investment. It serves as a chance to add a carefully crafted, strategic edge that works towards your financial journey.
