Private Credit: The New Capital Standard The Indian financial landscape is undergoing a structural transformation as private credit shifts from an alternative niche to a cornerstone of modern capital stacks. In the first half of fiscal **2026**, this momentum has accelerated, driven by a widening investor base and a significant wave of corporate refinancing. Current data shows that private credit deal volumes in India reached approximately **$9 billion** in the first half of **2025**, marking a **53%** increase over the previous year. Total assets under management (AUM) for the sector have now scaled beyond **$30 billion**, establishing India as the largest and most active private credit market in Asia. Market Dynamics and Yields While traditional bank credit remains substantial, crossing the **₹200 lakh crore** milestone in early **2026**, private credit is capturing the high-growth, bespoke segment of the market. Investors are increasingly drawn to the asset class for its "capital scarcity premium." Senior secured and unitranche transactions in India are currently pricing in the **14% to 18%** range. More complex, distressed, or special situation debt can see yields climbing toward **19.75%**, offering a significant spread over traditional fixed-income instruments. Sectoral Leadership and Deployment Capital allocation is increasingly concentrated in capital-intensive sectors where traditional lenders have retreated due to tighter regulatory constraints. * **Infrastructure & Data Centers:** Leading the charge, driven by a **$1.5 trillion** capital expenditure outlook for digital infrastructure. * **Real Estate & Logistics:** Utilizing structured credit for bridge financing and last-mile funding. * **Healthcare & Manufacturing:** Seeking flexible, long-dated financing for capacity expansion. Nearly **17%** of the capital deployed in recent months has been directed toward forward-looking growth initiatives, including strategic acquisitions and capacity building. Structural Evolution The market is entering a mature phase characterized by "institutionalization." Deal sizes are expanding, with transactions exceeding **$100 million** becoming standard for mid-to-large corporates. New fund structures are also democratizing access. Evergreen and semi-liquid vehicles are allowing wealth managers and family offices to participate alongside global institutional investors. This influx of domestic capital is complementing the **55%** of inflows historically provided by global funds. Risk and Resilience As the market scales, risk is shifting from being opaque to being "priceable." Improved recovery prospects under the Insolvency and Bankruptcy Code (IBC) and tighter underwriting standards have bolstered investor confidence. While the global private credit default rate is often cited below **2%**, analysts suggest a "true" rate closer to **5%** when accounting for selective defaults and liability management. In India, robust collateral frameworks and strengthened covenant packages are being used to manage these pressures as the market faces its first major test through a full credit cycle. Private credit now functions as a vital, permanent component of the financial ecosystem, providing the flexible, growth-oriented capital required for the next phase of Indian corporate evolution.