INDIA'S PRIVATE CREDIT LANDSCAPE: OPPORTUNITIES & GROWTH TRAJECTORY

With over two decades of expertise in financial services, Vineet specializes in debt capital markets, credit, financial inclusion, and asset management.

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Vineet Sukumar

Founder & MD

Vivriti Group

He served as CEO of IFMR Investment Managers and CFO of IFMR Capital, and has held significant roles at the Tata Group and Standard Chartered Bank. In an interaction with CEOInsights magazine, Vineet discusses India's private credit potential due to market gaps, stresses mid-market loan demand, and delves into performing credit nuances. He also advocates regulatory reforms for a deeper bond market. Below are the key excerpts of the following interaction.

1. How do you expect the Indian private credit scenario to pan out in the coming years?

The opportunities for private credit in India emanate from structural issues in its debt market causing a funding gap. Following the global financial crisis, the banking sector became increasingly risk averse towards the mid-corporate space. Since 2018-19, asset managers have sharply cut down their allocations to the segment following credit defaults while non-bank lenders largely migrated to retail credit after facing a liquidity crunch.

However, demand for loans keeps growing in the mid-market corporate space due to inherent strength in the economy. India is expected to be the fastest-growing major economy this fiscal year with an estimated 7Percent growth and is on track to become the 3rd largest economy by 2030. Given these factors, when we compare India's private credit market with overseas markets, we foresee a huge headroom for growth. India's private credit AUM accounts for <0.5Percent of its GDP while in Europe and the US, the ratio stands at 1.7Percent and 3.1Percent, respectively.

India has 15,000 mid-market enterprises that seek to borrow around US$75 billion annually.