Bank financing of corp deals may steal private credit lunch

A recent regulatory change proposing banks enter into acquisition financing could potentially disrupt the fast-growing private credit industry in pricing and deal-picking, and over the long term, transform the way deals are structured, according to sector experts.

- Dipti Sharma

The Reserve Bank of India (RBI), as part of its Statement on Developmental and Regulatory Policies released alongside the monetary policy statement on 1 October proposed allowing banks to fund corporate buyouts.

At a broader level, the RBI's proposal is "very proactive and progressive" and is expected to go a long way in reducing the cost and enhancing availability of capital pools for individuals and corporates, said Bhavdeep Bhatt, chief executive officer of Northern Arc Investments.

Private credit growth has been strong in 2025, with total deployment at $9 billion across 79 deals in the first half—a 53% jump from the first half of 2024 and close to three times the value for the latter half of 2024, a report by EY in August noted.

The biggest deal was the $3.1 billion raised by Porteast Investment of the Shapoorji Pallonji Group—the largest onshore private credit transaction in India to date.

Indian private credit players include Kotak Alternative Asset Management, 360 One, Avendus Capital and Edelweiss Funds, among others; international players include Blackrock, Blackstone, KKR, Abu-Dhabi Investment Authority, and several others.

A key factor for the growth of the private credit market in India until now has been the RBI's restrictions on banks providing acquisition finance, said Geeta Chugh, managing director, sector lead, financial services ratings at S&P Global Ratings.