India’s Private Credit Sector Offers Attractive Yields — But Risks Persist

India’s private credit market is attracting significant investor attention due to reported yields as high as 22%, but analysts are also cautioning that these returns come with notable liquidity and credit default risks. The surge in demand for alternative debt instruments reflects broader global trends in which institutional and retail investors seek higher returns in a low-rate environment. However, the illiquid nature of many private credit deals — which often lack transparent secondary markets — could pose challenges if economic conditions deteriorate or investors seek quick exit options. Credit analysts underscore the importance of rigorous risk assessment and diversified portfolios as these credit instruments become increasingly woven into broader investment strategies.