India Private Credit: A Changing Landscape and What It Means for Us as GPs

This piece was originally published on LinkedIn in October 2025. I am reposting it here on my personal blog as part of an effort to bring my writing on Indian Private Credit into one place.

Founder intent, once sufficient, remains necessary — but no longer enough — in an era driven by growth financing.

Today, understanding growth levers, industry cycles, and founder competence is paramount for managing risk and delivering consistent returns.

Evolution of India's alternate financing market

For long, I believed that promoter intent was the single most critical risk factor in India's private credit landscape. Almost self-sufficient.

Back then, the market was dominated by a few borrower groups, limited growth, senior-secured structures, and refinancing deals.

Since then, private credit has evolved. It has moved toward growth financing, shareholder consolidation, and pre-IPO debt.

This shift demands a deeper understanding of the underlying business, industry, and growth trajectory.

Founder intent, once sufficient, remains necessary — but no longer enough — in today's growth-driven market. Understanding growth levers, industry cycles, and promoter competence is now essential.

Phase I (2015–2018): Emergence of alternate financing

This phase was primarily led by NBFCs.

• Mostly structured lending
• Limited sophistication, but faster execution than banks
• Minimal presence of Private Credit (PC) AIFs

Phase II (2018–2022, including Covid): Entry of Private Credit AIFs

Predominantly focused on refinancing.

• Refinancing of NBFCs and occasionally banks
• Limited underwriting of business growth
• Governance and founder integrity were the key filters — industry insight was secondary
• The opportunity was driven by NBFCs' shrinking appetite, inertia in banking, and crises across credit MFs (Templeton and others) and aggressive lenders (Yes Bank, IndusInd and others)

Around this time (2017–2019), the IBC-driven distress cycle created one of the best vintages for India's distressed credit funds. Low-LTV entries at depressed values, exiting over the last two years into a market with minimal distress, delivering strong returns.

Phase III (2022–Present): The true growth phase for Private Credit AIFs

This is where we are today.

• AIF capital now fuels working capital, capex, promoter urgency, and M&A bridges
• Speed-driven growth funding, not just refinancing
• Industry insight and founder assessment are now critical

Speed, flexibility, and certainty are redefining the rules of the game.

NBFCs continue to focus on retail lending. Banks continue to be active as they have been, but they have limitations in terms of flexibility, speed and certainty.

Where this leaves us

India's Private Credit market is here to stay.

The more credibility we bring through sound risk management, the more capital we attract.

We cannot run a "Mutual Fund Sahi Hai" campaign for Private Credit. But we can build trust, one deal and one fund at a time.

Let's build it together.

Kapil Singhal is Managing Partner at True North Private Credit.