Growth of Private Credit as a Source of Income

Private credit is booming in India, offering higher returns, flexible terms, and fast access to capital. Discover how Hubridge connects investors and SMEs to this growing asset class.

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Pavan
Analyst
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Private credit, or capital extended by non-bank lenders such as funds, NBFCs, family offices, and fintech platforms, has grown to be among the quickest-expanding alternative investment and funding channels in India. The Indian private credit market at US$9.2 billion as of 2024, keeps growing, a per report from EY. With mainstream banks playing more defensively in the wake of NPA cleaning, investors now demand mid-to-high-teen returns, as well as more diversification. Private credit provides both.

Why Private Credit is Rising in India

In April 2025, the RBI launched measures that permitted banks and NBFCs to securitize standard and stressed loans of about ₹2.3 trillion, promoting the development of a "junk-debt" segment as well as fresh income streams for investors.

NBFCs meanwhile kept going aggressively, with 20% credit growth in FY 2025, significantly outperforming the 12% growth in banks.

Growth in private credit is largely driven by a combination of regulatory easing, tighter bank lending standards, and the emergence of sophisticated private credit platforms that are able to underwrite risk more flexibly and efficiently, especially in sectors where traditional lenders remain risk-averse.

Where Private Credit Fits in Your Portfolio

Through its Wealth Management and Private Markets desk, Hubridge brings opportunities for structured private-credit investments like senior-secured loans, revenue-based securities, and mezzanine lending. These provide:

  • Regular income from contractual cash flows and floating rates
  • Diversification, thanks to low correlation with public equities or government securities
  • Sophisticated monitoring, including collateral review, covenant analysis, and sector research.

As a Registered Investment Advisor, Hubridge acts in our client's best interest, providing transparent, fee-based guidance critical to illiquid, sophisticated investments.

Fuel for Business Growth

Hubridge's SME Investment Banking bridges the mid-market business funding gap that many businesses may find difficult to access. We help such businesses by:

  • Arranging private credit facilities, such as term loans, working capital, and mezzanine debt
  • Connecting entrepreneurs with reputable lenders through our SME-Investor Hub
  • Mixing debt instruments with quasi-equity, balancing flexibility and cost

For instance, a mid-sized manufacturing company is raising ₹20 crore through a structured 5-year note at a competitive cost, leveraging Hubridge's deal-structuring skills.

Value Creation & CFO Partnership

Hubridge's CFO Partnership aids companies in handling debt in a responsible manner. We assist in creating:

  • Governance systems monitoring solvency and liquidity metrics, as seen by lenders.
  • Financial infrastructure, such as ERP and analytics platforms, to enhance visibility.
  • Stress testing and forecasting, rate-hike protection, and covenant breaches.

By infusing operational discipline, we make sure that growth is funded with discipline and efficiency rather than financial stress.

For information on how outsourced CFO services are a great option to drive SME success, click here.

Benefits for Investors and Borrowers

For investors, private credit offers substantially higher returns, often in the low to mid-teens, compared to traditional fixed-income products. Floating-rate structures also provide an inflation hedge, and the low correlation between private credit and equities diversifies portfolios.

Borrowers are helped by alternative capital sources, better tailored to their cash-cycle requirements, be it through bullet repayments, deferred interest, or payments based on revenue. Private credit transactions also take less time to close compared to public bond offerings or syndicated bank loans.

Risks and How Hubridge Assists in Mitigating Them

Illiquidity is a major concern. Private credit tends to be tied up for 3–7 years. Hubridge ensures investments are aligned with clients' time frames.

Interest-rate sensitivity is also important since most of our facilities are floating-rate. As a risk mitigation, we favor strong cash-flow borrowers and negotiate rate caps or structured terms.

Transparency of valuation is another issue; thus, Hubridge evaluates and suggests vehicles providing quarterly NAV reporting, third-party audits, and robust governance protocols.

Finally, regulatory regimes, such as the RBI's securitization revisions and SEBI's AIF guidelines, are in a state of constant flux. Hubridge is constantly tracking these and maintaining portfolio compliance.

Conclusion

Private credit is becoming an essential asset class for businesses and investors alike in India. Deployed at US$9.2 billion in 2024 and complemented by favorable regulatory changes, the momentum does not look like it will slow down anytime soon.

Hubridge acts as a bridge between borrowers and investors. Our synergistic model, across Wealth Management, SME Investment Banking, and CFO Advisory, allows clients to access, manage, and leverage private credit with transparency, control, and confidence.

Let Hubridge guide your entry into India's private credit story, where yield, flexibility, and purpose meet under vigilant stewardship.

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