India’s private credit market is expected to maintain its growth momentum over the next one to two years, despite intensifying competition among lenders, with domestic funds poised to take a larger role in deployment and increasingly target bigger transactions, ANI reported, citing an EY research report.

The trend was evident in the first half of 2026, when private credit transactions tracked by EY reached $3.5bn, up slightly from $3.4bn in H2 2025. Domestic private credit funds accounted for 74% of deal value and about 79% of transaction volume, strengthening their position relative to global lenders.

According to EY, domestic funds are gaining an advantage from their local networks and access to mid-market borrowers, while also expanding into larger deals. Global funds’ share of private credit deal value declined to 26% in H1 2026 from 36% in H2 2025 and 68% in H1 2025.

Demand for private credit remained diversified, with refinancing, real estate project funding, HoldCo financing and acquisition funding among the principal uses. EY’s Private Credit Pulse survey also identified stressed situations, capital expenditure and M&A financing as emerging sources of demand.

Investor sentiment towards the asset class remained positive. About 60% of survey respondents were bullish on private credit over the next one to two years, while 13% were very bullish and 27% remained cautious.

Real estate was the largest sector for private credit deployment, accounting for about 35% of deal value, followed by healthcare at 13% and food and beverages at 12%. The food and beverage segment recorded particularly strong momentum during the period.

EY expects private credit to remain an important part of India’s evolving credit landscape as domestic funds scale up, deal pipelines deepen and borrowers seek flexible financing. However, lenders are likely to face greater competition and will need to maintain disciplined risk selection.