INDIA Trends and Developments Contributed by: Tirthankar Datta, JSA Advocates & Solicitors
Conclusions: the road ahead While the road ahead for private credit seems to be fertile with opportunity, the lessons learnt from the indiscriminate credit underwriting by Indian private and public sector banks which led to the NPA crisis should not be ignored. The regulator has highlighted risks in private credit involving lower supervision and regulation, unsecured loans, and multiple layers of leverage being tak - en by midmarket companies with a riskier bor - rower profile and complex structures. However, while it is still a small part of the broader fixed income spectrum, private credit has gained a strong foothold and established itself as a key capital source in the credit ecosystem.
lenders such as banks and NBFCs. New age private credit financiers are using AI software and data analytics as part of the credit decision - ing process. The next few years may even see a move to greater digitalisation through digital documentation, signing and KYC, to streamline and hasten the distribution of credit, similar to a number of retail lenders. Private credit funds may even partner with digital lending platforms – an area where the regulator has made signifi - cant changes in the regulations to supervise any underwriting of risk by such platforms. Digital channels will allow a faster origination and facili - tate distribution of loans. The sector may move to securitisation, allowing the participation of investors in a more diversified pool of assets such as mortgages, auto loans or retail loans.
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