The cleanest way to see the shift is in a single number. Lumera's deal ledger, built from AIF filings and cross-checked against our lender interviews, records approximately ₹310 billion of private credit extended to Indian mid-market companies in calendar 2025, across 214 transactions. Five years ago the same number would have fit on one page of a notebook.
The average ticket was ₹1.45 billion. The average borrower was not distressed, not sponsor-backed and not, by any standard definition, unbankable. It was a company doing ₹4 to 9 billion in revenue that wanted growth capital, acquisition finance or a promoter buyback funded — and did not want to wait ninety days for a credit committee to say no.
What the lenders are actually buying
Strip the marketing off mid-market private credit and the product is simple: twelve to sixteen percent yields, tight covenants, cash-flow escrow, and security packages the banks were persuaded to stop asking for in the liquidity-fat years after 2020. The borrower pays roughly 300 basis points over bank pricing in exchange for certainty of execution in four to six weeks.
The more interesting question is why the banks left the field. Part of the answer is regulation: post-2018, the RBI's prompt-corrective-action regime and the stockmarkets' punishment of any bank with slippage taught public-sector lenders that a loan that cannot go bad is worth three that might. Part of it is internal: mid-market lending requires sector underwriting skill that bank credit departments have been losing to the funds themselves.
The banks did not lose the mid-market. They priced it, decided the risk-adjusted return was not worth the paperwork, and left. The funds simply read the same memo and reached the opposite conclusion.
The risk question hangs over all of this, as it should. Our ledger tracks fourteen restructurings among 2022–23 vintage deals, a default rate of about 3.1 percent — sober, not alarming, though the vintage is young. The structural worry is concentration: a third of 2025 volume went into real-estate-adjacent cash flows, and the funds competing for paper are beginning to accept covenant structures they would have rejected eighteen months ago. Yield compression from 15 to 13 percent across eighteen months is not just competition; it is risk being repriced downward before it has been tested.
Watch the second-lien structures now appearing in the ledger. When an industry starts layering its capital structure, the cycle has moved to its second half. The returns will still look excellent until, one quarter, they do not. That is not a prediction about 2026. It is a reminder that this asset class has never yet been tested by a genuine Indian credit downturn, and that ₹310 billion of new paper is a lot of underwriting to be right about.
