Moody’s says India’s M&A bank-funding rule could squeeze private credit

Moody’s Ratings says India’s move to allow banks to fund acquisitions could weaken the economics of the private credit sector. The rating agency argues that the change would likely affect one of the most profitable areas for private credit funds, potentially reducing returns by shifting acquisition financing toward banks. Moody’s links the potential impact to the scale and recent growth of private credit in India, noting that the sector has more than doubled over the past five years to about $25 billion in assets under management as of end-2025. Moody’s also points to the activity level in the market, saying annual transaction volumes have surpassed $11 billion. Taken together, the agency’s assessment is that the rule change may alter competitive dynamics in acquisition financing, with banks gaining a wider role in funding deals that private credit funds have supported. The sources collectively focus on Moody’s view of how the policy could affect private credit performance, without detailing specific implementation timelines or case-by-case outcomes.