This article is originally published by Lexology at Year in review: lending and secured finance in India – Lexology.

Introduction

Despite global challenges, India’s economy has shown positive indications that leave room for cautious optimism, seeing an estimated GDP growth rate of 7.6% in 2025–2026,[1] with expansion in the second half of 2025 led by resilient private consumption, continued strength in services and sustained momentum in construction and manufacturing.[2]

The corporate bond market has seen a significant growth over the past 10 years. Net outstanding corporate bonds have increased from 17.5 trillion rupees in 2014–2015 to around 53.6 trillion rupees in 2024–2025, consistently accounting for 21% to 25% of the total bond market outstanding.[3]

The market for syndicated loans has also shown key signs of growth and has provided an important avenue for larger loan exposures, where multiple lenders provide loan facilities to a single borrower. These loans have also increasingly seen global participation.

Year in review

Scheduled commercial banks

Aggregate credit outstandings to scheduled commercial banks (SCBs) are reported to have increased from US$1,990 billion in November 2024 to US$2,219 billion in November 2025, surmised to represent a year-on-year growth of 12%. It is reported that credit growth has been broad-based across sectors, led by services and personal loans.[4] Liquidity conditions are reported to have improved, supported by surplus systemic liquidity and robust monetary policy transmission, particularly in short-term markets.

In December 2025, the Reserve Bank of India (RBI), India’s central bank, reduced its repo rate to 5.25% (from 6.5% in 2024)[5] in addition to earlier relaxations to reserve requirements, with the cash reserve ratio being 3% (down from 4% in 2024),[6] incentivising customers to take out loans.[7]

RBI’s Financial Stability Report (FSR) observes that SCBs remained well capitalised with strong liquidity buffers and gross non-performing assets at multi-decade lows, reinforcing system-wide resilience.[8]

Non-banking financial companies

The Non-banking financial company (NBFC) sector continued to be a key driver of credit growth, with aggregate lending by upper and middle layers accelerating to 21.3% year-on-year as of September 2025, driven largely by upper-layer NBFCs.[9] The FSR also notes improving asset quality across NBFCs,[10] with the share of large borrowers in gross non-performing assets declining materially, even as their share in total credit remained steady.[11]

NBFCs have also had the benefit of policy related bolstering: the hike of 25% on the risk weight of exposures from SCBs to NBFCs in 2023 was reversed by the RBI,[12] incentivising a broader flow of credit in the market.

Private credit

As per deals tracked by Ernst & Young, Indian corporates raised US$9.00 billion-equivalent in 79 private credit deals in the first half of 2025,[13] and US$3.4 billion-equivalent in 87 private credit deals in the second half of 2025.[14] Real estate continues to be the dominant sector, accounting for 42% of total deal value, followed by healthcare and other industrial products at 15% each.[15]

In the first nine months of 2025, 80% of the private credit issuances tracked by Octus were structured as non-convertible debentures (NCDs), with approximately 47% of issuances offering an internal rate of return of 18% or greater. Proceeds of issuances were primarily used towards refinancing (60.6%), acquisition-related activities (22.1%) and capital expenditure/working capital (14.1%).[16]

Notable deals

Some of the biggest deals of 2025 included:

• US$3.14 billion raised by Shapoorji Pallonji Group;
• US$750 million raised by Adani Group;
• US$733 million raised by GMR Infra Enterprises Private Limited; and
• US$600 million raised by Manipal Education and Medical Group.[17]

Regulatory updates

India’s regulatory landscape has seen several key regulatory updates, all aimed at improving, incentivising and strengthening credit performance. Some major regulatory updates include the following.

Amendments to the external commercial borrowing framework

The RBI has issued the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026,[18] introducing several amendments that are expected to incentivise foreign credit into India, aiming to create a more liberalised and market driven external commercial borrowing (ECB) regime.

Key amendments include the following.

• The previously prescribed all-in cost cap has been abolished for most ECBs. Pricing must now be in line with prevailing market conditions and, for related party ECBs, on an arm’s length basis.
• Relaxations on end use restrictions include: (1) use for transactions in securities where the borrowing is for strategic corporate actions (eg, mergers, demergers and acquisitions of control); and (2) carve-outs introduced for certain real estate uses, such as purchase or lease of immovable property for own use, industrial parks and construction-development projects with developed trunk infrastructure.
• ECBs may now be arranged with any person resident outside India, a branch outside India of an RBI-regulated entity and a financial institution/branch set up in an international finance service centre (IFSC). The specific Financial Action Task Force (FATF)/International Organisation of Securities Commissions requirement for lenders has been removed, though some Authorised Dealer banks are likely to still require compliance under applicable know your customer (KYC) directions, and so may not permit ECB from FATF non-compliant lenders.
• The borrowing limit is now the higher of (1) outstanding ECB of US$1 billion or (2) total outstanding borrowing (external and domestic, excluding non-fund-based credit and compulsorily convertible instruments) not exceeding 300% of net worth per the last audited standalone balance sheet. This does not apply to borrowers regulated by financial sector regulators.
• The minimum average maturity period is now three years for all borrowers, except for the manufacturing sector (one to three years, subject to outstanding ECBs not exceeding US$150 million).
• Monthly reporting has been replaced with event-based reporting. Form ECB 2 must be filed within seven days of the end of the month in which any drawdown or debt servicing occurs (ie, any event altering the outstanding borrowing under the relevant loan registration number).

Introduction of the expected credit loss framework

The RBI issued the Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026 to replace the existing provisioning framework, which is based on incurred loss, with an expected credit loss (ECL) provisioning framework subject to prudential floors, in line with global trends.[19] A three-stage approach was also prescribed for asset classification, with financial instruments that have had a significant increase in credit risk being classified under Stage 2 (as opposed to those that do not being classified under Stage 1), and financial instruments that are considered to be credit-impaired being classified under Stage 3. These directions will come into effect on 1 April 2027.

Framework for financing capital market exposures by banks

The RBI has issued the revised Reserve Bank of India (Commercial Banks – Credit Facilities) Amendment Directions, 2026, which liberalised the framework for acquisition financing in India.

Under the current legal framework, the ability of commercial banks to engage in acquisition financing is very limited, with acquisition finance mainly being raised through foreign portfolio investors, alternative investment funds and NBFCs.

These directions prescribe certain conditions for acquisition financing by banks to ensure that the investments are driven by the core objective of creating long-term value for the acquirer through potential synergies. These include: (1) the requirement for the acquirer having a minimum net worth of 5 billion rupees and being profitable for the past three years (with an additional requirement for unlisted companies to have an investment grade rating (BBB- or above) from a credit rating agency); (2) the acquirer and target must not be related parties; and (3) a financing limit of 75% of the acquisition value of the target company (with the remaining to be sourced from the acquirer’s own funds), which should be determined by an independent valuer (two independent valuers in the case of an unlisted company).[20]

These amendments will come into effect on 1 July 2026.

Framework for project finance

The RBI has issued the Reserve Bank of India (Project Finance) Directions 2025 applicable to all exposures of entities regulated by the RBI where the predominant source of repayment is the project cash flow and where all lenders have entered into a common agreement with the debtor.[21]

These directions lay down conditions for disbursement, ensuring that disbursement must be in accordance with the stage of the project, and prescribe that any resolution of a “credit event” or change in material terms and conditions in the loan contract in such projects, shall be as per the Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Directions, 2025 (or equivalent directions applicable to other regulated entities).

Borrowings by infrastructure investment trusts and real estate investment trusts

Infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) are investment vehicles regulated by Securities and Exchange Board of India. Currently, InvITs are permitted to borrow money from banks and certain NBFCs, and issue commercial papers. Listed InvITs and REITs are also permitted to issue listed debt securities subject to the conditions prescribed under the applicable legal framework.[22]

The RBI has published the draft Reserve Bank of India (Commercial Banks – Credit Facilities) Second Amendment Directions, 2026, which propose amending the framework for commercial bank lending to InvITs. These directions also propose permitting commercial banks to lend to REITs, harmonising the framework governing bank lending to REITs and InvITs, including proposed prudential limits and security requirements.[23]

The Insolvency and Bankruptcy Code (Amendment) Act, 2026

The Ministry of Law and Justice published the Insolvency and Bankruptcy (Amendment) Act, 2026 (the IBC Amendment Act), which proposed several noteworthy amendments to the Insolvency and Bankruptcy Code, 2016 (IBC). As of 29 April 2026, the date on which the IBC Amendment Act will come into force is yet to be notified by the government. Key implications of the amendments include:

• governmental authorities will not be able to claim secured creditor status solely by operation of law;[24]
• payment guaranteed to the dissenting financial creditors will be the lower of liquidation value or the amount due to them if the resolution plan amount was distributed per the liquidation waterfall set out under section 53 of the IBC;[25]
• consent of 66% of creditors with security over a common asset will be required to realise security outside liquidation;[26]
• the lookback periods for preferential, undervalued and extortionate credit transactions will be increased; and[27]
• inter-creditor agreements between similarly placed creditors will be recognized.[28]

The IBC Amendment Act also introduces the creditor-initiated insolvency resolution process for specific corporate debtors to be notified by the government, where the insolvency resolution takes place without the intervention of the courts and the existing management remains in possession of the corporate debtor during the insolvency process.[29]

Tax considerations

Withholding taxes on payments to lenders

Interest payments made by borrowers to lenders may be subject to withholding tax at rates ranging from 9% to 35% plus surcharge and cess, depending on factors such as the nature of the borrowing instrument, the residential status of the lender and the location of borrower (for, eg, entities based in an IFSC).

In most cases, it is customary for the borrower to contractually agree to bear the tax liability, which would enable the lender to receive interest on a gross basis without any tax deduction.

Stamp duty

All agreements and instruments are subject to stamp duty payment in India. The quantum of stamp duty depends on the state in India where the agreement is stamped, with each state having its own schedule for stamp duty. For instance, in Karnataka, a stamp duty of 500 rupees will be applicable on a loan agreement[30] and in Maharashtra the stamp duty on a loan agreement is considerably higher, being 0.2% of the total amount of the loan.[31]

The Supreme Court has observed that where 13 different banks had lent money to the borrower pursuant to 13 separate loan agreements, the “indenture of mortgage” executed by the borrower in favour of a security trustee acting for the benefit of the lenders consummates 13 distinct transactions, and therefore stamp duty would have to be paid accordingly.[32]

For assignment of loan exposures, this assignment is generally treated as a “conveyance” for the purpose of determining the stamp duty payable. However, as the stamp duty prescribed on conveyances is high, several states, such as Maharashtra[33] and Delhi,[34] have capped the stamp duty on assignment agreements that assign debt with underlying securities (at INR 100,000 rupees in both cases).

Credit support and subordination

Various forms of security can be granted over assets to secure a loan. This includes mortgage, hypothecation and pledge. Additional forms of credit enhancement include guarantees and negative pledge undertakings.

More and more, alternative credit investors are also considering structured forms of credit enhancements – such as put/call options, non-disposal undertakings combined with powers of attorney and golden share arrangements.

Mortgage

Fundamentally, the (Indian) Transfer of Property Act, 1882 (TOPA) recognises six types of mortgages that can be created in India. These are:

• simple mortgage (mortgaged property remains in the possession of the mortgagor);
• usufructuary mortgage (possession of mortgaged property is handed to the mortgagee);
• mortgage by conditional sale (mortgaged property is sold to the mortgagee, with the sale being reversible upon repayment of the debt);
• English mortgage (mortgage subject to enforcement rights without court intervention);
• mortgage by deposit of title deeds (where the title deeds of the mortgaged property are deposited with the lender with the intention of creating a security); and
• anomalous mortgage (a residuary category that covers all other mortgages).[35]

Practically, the most common type of mortgage in lending transactions is a registered mortgage (ie, a “simple mortgage”) coupled with, where possible, provisions under an English mortgage (for sale without court intervention). Historic practice of Indian banks and financial institutions, especially in cases of loans against property, has been to couple the above also with deposit of title deeds with the bank or financial institution (not for the purpose of creating the mortgage, but rather to hold the title documents to prevent any wrongful dealing with them). A key consideration for lenders when deciding on the type of mortgage is the applicable stamp duty (see above section). While several states have capped the quantum of stamp duty payable on mortgage documents, a few states still provide for the stamp duty to be ad valorem without a cap, which could make the stamp duty prohibitive for high-value debt transactions.

Hypothecation

Security over movable property and intangible property is typically created in the form of a charge/hypothecation. Such a charge can be a floating charge or a fixed charge depending on the type of asset being charged, the type of credit facility and the business of the chargor (among other factors). Typically working capital facilities have the benefit of a floating charge over receivables and other ordinary course assets of the chargor, whereas term loan creditors will often have benefit of a fixed charge over specific assets, typically funded from the term loan.

In terms of documentation – a hypothecation is granted under a deed of hypothecation often along with a power of attorney. Practically and in our experience, enforcement of security interest over hypothecated assets can be tricky and time-consuming, and so the power of attorney can provide a significant advantage if properly executed and registered.

Pledge

Under Indian law, a pledge is the bailment of goods as security for payment of a debt or performance of a promise.[36] Pledges over securities are emerging as the most convenient and sought after type of security in a secured financing transaction, due to their relative ease of enforcement.

Dematerialised securities can be pledged in the Indian depository system, through a request by the pledgor to their depository participant (through whom the securities are held) to pledge the securities in favour of the pledgee. Once the pledge is created in the depository system, the pledgor is not permitted to transfer the pledged securities and the pledgee can enforce the pledge by filing the appropriate form for enforcement with this depository participant, who, in turn, will transfer holding of the securities into the dematerialised account of the pledgee, for the pledgee to deal with the securities as appropriate.

The Supreme Court has held that once the pledgee is registered as the beneficial owner of the pledged shares, it shall be entitled to all rights, benefits and liabilities attached to the shares, even before the shares are sold.[37] The Bombay High Court has further held that there is no statutory bar on the pledgee exercising voting rights attached to pledged shares where the deed of pledge expressly provides for this.[38]

Registration requirements for security

Under the Registration Act, 1908, it is mandatory in India to register all instruments that grant any right in any immovable property. Registration must typically be completed within the statutory period from execution at the appropriate local sub-registrar’s office. The only nuance is in the case of an instrument recording the creation of mortgage by deposit of title deeds. Since the mortgage is created by the act of deposit of title deeds and not the execution of the instrument, it may not be mandatory to register such an instrument in some states in India (whereas registration of such a document is mandatory in other states). Banking and financial institutions in India are reasonably uniform in their requirement for title deeds to be registered notwithstanding potential flexibility under the statute – since such registration operates to give public notice of the charge, barring some exceptional cases – which would be driven by circumstance and subject to other mitigants.

Under the Companies Act, 2013, companies creating a charge over any of their assets must file particulars of the charge with the Registrar of Companies (ROC) within prescribed timelines. This applies to all charges, whether created by instruments or otherwise, including modifications and satisfactions.[39]

Under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, certain categories of secured creditors (banks, financial institutions, asset reconstruction companies, trustees acting for subscribers of listed debt securities or debt provided by banks/financial institution) are required to register creation, modification and satisfaction of security interests in the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI).

Under the IBC, financial creditors are required to submit financial information and information about assets over which any security interest has been created, to an information utility.[40]

Charges over certain asset classes (such as motor vehicles, trademarks and intellectual property rights, shipping vessels, aircraft, intellectual property) need to be additionally registered with sectoral regulators.

It is customary for the borrower to execute a notarised power of attorney in favour of the lender/security trustee to grant them authorisations such as taking possession of and dealing with hypothecated assets.

A notice of charge may also be given to banks where a charge is created over bank accounts in order to prevent enforcement from being hampered.

Priority and subordination

Contractual subordination is another common form of credit support. This is effected via a subordination agreement executed among the senior creditor, the junior creditor and the borrower.

Customary terms include terms for subordination of the debt and turnover provisions, and in some cases also provide for significant rights to the senior creditor in the event of insolvency of the debtor (including the right to vote in connection with the subordinated debt and the right to receive distribution proceeds).

In absence of inter-creditor agreement on ranking of security interest among the lenders, the general rule with regard to priority is that prior security interest will by default have higher priority over subsequent security interest.[41] However, this rule is subject to certain exceptions as follows:

• a mortgage that is registered under the Registration Act, 1908 will have priority over an earlier unregistered mortgage.[42] However this is subject to the doctrine of notice;
• where an exception is created by a statute;
• where a mortgage is executed on the directions of a court to protect a property;
• where a salvage lien is created (ie, where a lien is created for moneys advanced to save a property from destruction or forfeiture);[43]
• specific classes of assets, where registration is required, may have priority on the basis of registration. For instance, mortgages created over ships are subject to priority on the basis of when they were recorded in the register book of the Registrar of Indian vessels and not on the date of creation of the mortgage;[44] and
• under the Companies Act 2013, an unregistered charge must be disregarded by a liquidator. However, the National Company Law Appellate Tribunal (NCLAT) has held that a secured creditor can prove their security through the other valid means (such as a CERSAI filing) where the charge is unregistered.[45]

Legal reservations and opinions practice

Opinions practice

It is customary for lenders to require a legal opinion regarding the authority and legal capacity of the Indian obligor entities and the validity and enforceability of the loan and security.

Legal opinions are usually provided by the lender’s legal counsel as a condition precedent to funding, but in some cases lenders may also accept legal opinion provided by the borrowers’ legal counsel. The market practice is for the legal opinion to be addressed to the lender/trustee and it is usually clarified in the legal opinion that: (1) the opinion is solely for the lender’s benefit; and (2) if the lender chooses to disclose the opinion to other persons, the legal counsel will not have any liability to these persons.

Legal limitations

The following are the most significant legal limitations and caveats that can affect the validity or enforceability of lending and secured lending arrangements in India.

Stamp duty and evidence

If a stamped document is received in a state other than where it was stamped, the differential value of stamp duty (if the stamp duty applicable in the state of receipt of the document is higher) is also required to be paid. This typically entails a process of adjudication (ie, assessment of the differential stamp duty amount by the local officer). An unstamped or inadequately stamped instrument is generally inadmissible in evidence until cured, which can delay or prejudice recovery. However, there are some courts and tribunals in India which may, as a matter of practise, accept unstamped/execution versions of transaction documents (whose execution is not a matter of dispute and is not required to be established by evidence), where the original document has been executed outside the state.

Registration and filings

As above, there are various formalities prescribed under law and which have evolved as a matter of practise which may have a bearing on validity and enforceability of the relevant document such as registration of charges with the ROC, filing with CERSAI and registration (as applicable) of mortgages and other registrable interests.

Substantive enforceability issues

Upon admission of a corporate insolvency resolution process under the IBC, a statutory moratorium restricts enforcement actions. This can delay or suspend realisation.

Enforcement may be limited by general principles of equity and pursuant to the Specific Relief Act, 1963 certain obligations cannot be enforced. For instance, equitable remedies or specific performance may not be available where damages are considered to be an adequate remedy by the court.

Claims may become barred under the Limitation Act, 1963 or may be or become subject to set off or counterclaim.

Provisions as to severability of the provisions in the loan documents may not necessarily be effective. It may depend on the nature of illegality, invalidity or unenforceability in question.

Provisions concerning obligations or agreements to agree are unenforceable because an obligation or agreement to agree is void for uncertainty.

For liquidated damages and penalties, recovery is limited to reasonable compensation not exceeding the stipulated sum.

Clawback risks

During IBC proceedings, there is the risk of certain transactions being reversed or declared void by the National Company Law Tribunal (NCLT) (India’s bankruptcy court). These include the following.

Preferential transactions

A transaction is at risk of being classified as a preferential transaction if there is a transfer of property or interest in property by a corporate debtor for the benefit of a creditor or a surety or a guarantor for or on account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor, and such a transfer has the effect of putting such creditor or a surety or a guarantor in a beneficial position than it would have been in the event of a distribution of assets being made in accordance with prescribed distribution waterfall under section 53 of IBC.[46]

The look back period for a preferential transaction is two years preceding the insolvency commencement date if the preference is given to a related party (other than by reason only of being an employee) and one year preceding the insolvency commencement date if the preference is given to a person other than a related party.

Undervalued transactions

A transaction will be considered as an undervalued transaction if the corporate debtor: (1) gave a gift to a person or entered into a transaction with a person that involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of consideration provided by the corporate debtor; and (2) the transaction did taken place in the ordinary course of business of the corporate debtor. Hence, any transaction undertaken by a corporate debtor for transferring any asset, at no or significantly less value, is an undervalued transaction.[47]

The look back period for an undervalued transaction is two years preceding the insolvency commencement date if the transaction was made with a related party and one year preceding the insolvency commencement date if the transaction was made with a person other than a related party.

Transactions defrauding creditors

Where the corporate debtor has deliberately entered into an undervalued transaction to keep the assets of the corporate debtor beyond the reach of any person who is entitled to make a claim against the corporate debtor, or in order to adversely affect the interests of such a person in relation to the claim, then the NCLT may pass the following orders:

• restoring the position as it existed before such transaction, as if the transaction had not been entered into;
• protecting the interests of persons who are victims of such transactions.[48]

Extortionate credit transactions

An extortionate credit transaction is a transaction where the terms of the transaction require the company to make exorbitant payments in respect of the credit provided or are unconscionable under the principles of law relating to contracts.[49]

Where the company has been a party to an extortionate credit transaction involving the receipt of financial or operational debt during the period within two years preceding the insolvency commencement date, the liquidator or the resolution professional may make an application for avoidance of such transaction to the NCLT if the terms of the transaction required exorbitant payments to be made by the corporate debtor.[50]

Once the IBC Amendment Act is notified, the lookback period for preferential, undervalued and extortionate credit transactions will start from one or two years (as applicable) prior to the date the insolvency petition is filed, rather than the insolvency commencement date (ie, the date the insolvency petition is admitted by the NCLT).

Enforcement of foreign court orders and foreign arbitral award in India

Choice of a foreign governing law (in case the lender is an offshore entity) is recognised in India and if the parties opt to have disputes resolved by foreign court proceedings, it is relevant to note that only money decrees passed by certain courts of certain territories[51] (designated as reciprocating territories by the Indian government) are recognised in India. This should be kept in mind while selecting the courts that will have jurisdiction. Further, the foreign judgement must pass certain threshold requirements to be considered conclusive (for instance, it must be given on merits, in proceedings that are not opposed to natural justice).

If the decree passed by a foreign court does not meet the requirements for recognition, the decree holder will need to file a fresh civil suit in India within three years of the date of the foreign decree, which can lead to a time-consuming resolution process.

In financing transactions, it is common (and recommended) to opt to resolve disputes by arbitration administered by a reputed international arbitration organisation (such as the Singapore International Arbitration Centre and the Hong Kong International Arbitration Centre) to ensure a smoother and more efficient resolution process, and if foreign seated, then to be within a notified jurisdiction (see below).

Any foreign arbitral award made: (1) pursuant to an arbitration agreement to which the Convention on the Recognition and Enforcement of Foreign Awards, 1958 (the New York Convention) applies; and (2) in a country notified by the Indian government as a country to which the New York Convention applies,[52] is enforceable in India and binding on the persons between whom it was made (subject to certain conditions and requirements to be fulfilled by the person applying for the enforcement of the award – such as producing documents to evidence the foreign award in the manner required under Indian law).

There are limited grounds on which the enforcement of such a foreign award that meets the above conditions can be refused by an Indian court.

Loan trading

Lending institutions transfer loan exposures for a range of prudential and strategic reasons, including proactive liquidity management, balance sheet optimisation, portfolio rebalancing across sectors and tenors and strategic exits from specific asset classes or counterparties. A well-functioning secondary market for loans serves as a critical tool for risk distribution, allowing institutions to diversify credit exposures, mitigate concentration risks and respond dynamically to evolving macroeconomic conditions. It also facilitates efficient capital recycling, enabling lenders to originate new credit while maintaining prudent leverage, and creates additional avenues to mobilise liquidity without resorting solely to short-term wholesale funding.

For loans where the underlying loan documents are governed by Indian law, transfer of loan exposures by way of an assignment agreement is the most common form of loan transfer. Under the assignment agreement, the existing lender assigns its rights (and, where applicable under the finance documents, related security and claims) to a new lender. Transfer of loan does not require the consent of the borrower unless the underlying loan agreement provides for it, but a notice of such assignment/transfer is issued to the borrower and other obligors to perfect the transfer of receivables and associated security interests.

For loans that are in the form of debentures, the transfer of loan exposure is undertaken by transferring the debentures to the new lender and an assignment agreement is not usually executed if the underlying debenture documents have been entered through a debenture trustee.

Secondary purchasers generally seek to acquire the full package of security and guarantees that support the transferred loan. The precise mechanics depend on the transfer method and the nature of the collateral and support. In most syndicated facilities, security is granted in favour of a security/debenture trustee for the benefit of all lenders. A transfer of loan by one of the lenders makes the new lender a beneficiary of the existing security trust without the need to recreate security. Perfection records usually remain in the name of the trustee and do not require change. However, where the security is created in favour of the original lender, the charge filing records are typically amended to reflect the details of the new lender.

Special considerations

Indian law raises several local nuances for lenders – spanning securities and company law formalities, foreign exchange controls, stamping/registration and perfection and insolvency/enforcement constraints. Key additional protections usually include conditions precedent around corporate and regulatory approvals, detailed perfection and filing undertakings (including stamping/registration), information-utility filings, covenants to comply with foreign exchange and securities law, India-tailored events of default and enforcement-ready deliverables (including notarised powers of attorney and sector-specific consents).

Some of the special considerations are as follows:

• sectoral restrictions: Certain sectors impose additional conditions on borrowing or security (eg, real estate has regulations around escrowed accounts, and other regulated sectors such as insurance, telecoms and financial services); and
• foreign exchange and cross-border elements, namely:
  • loans from non-residents to Indian borrowers must comply with the RBI’s ECB framework (as above).
  • creation of security (including pledge of shares, mortgage and hypothecation) and guarantees in favour of offshore lenders may require compliance with the foreign exchange regulations;
  • sale pursuant to security enforcement is likely to need to comply with applicable foreign exchange regulations – and in some cases may not be permitted;
  • any debt-to-equity conversion upon default must also comply with pricing guidelines, eligibility and filings under the foreign exchange regulations;
  • remittance of enforcement proceeds to an overseas lender would need to be processed via the authorised dealer bank, and so may entail greater scrutiny and may even require regulatory approval; and
  • permissibility of payments under damages and indemnity clauses has hitherto been unclear – but this appears to be marginally resolved by a recent ruling of the Supreme Court, which held that the payment of compensatory damages pursuant to an arbitral award did not require RBI approval under the foreign exchange regulations.[53]

Outlook and conclusions

While there is a general trend towards global participation in the lending market in India, as well as a general willingness to create favourable conditions to enable broader flows of credit, the impact of India’s foreign relations and political stability globally will be important considerations in order to see how the lending market will perform in the upcoming year.

Domestic considerations that will be important to chart out are how the RBI will maintain a dynamic legal framework for lending – with specific focus on the functioning of the new amendments concerning ECBs and acquisition financing.

Endnotes

[1] Ministry of Statistics and Programme Implementation, National Accounts Statistics (NAS) accessed 2 April 2025.

[2] Ernst & Young, Private Credit in India: H2 2025 Update, page 8.

[3] Ernst & Young, Private Credit in India: H2 2025 Update, page 15.

[4] Ernst & Young, Private Credit in India: H2 2025 Update, page 12.

[5] Reserve Bank of India, Liquidity Adjustment Facility – Change in rates, RBI/2025-26/132 (5 December 2025).

[6] Reserve Bank of India, Maintenance of Cash Reserve Ratio (CRR), RBI/2025-26/46 (6 June 2025) accessed 15 November 2025.

[7] Ernst & Young, Private Credit in India: H1 2025 Update, page 11.

[8] Reserve Bank of India, Financial Stability Report (December 2025), page 1, https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/0FSRDEC25D1EB9AAEE5724BD5A3E068490996BAD5.PDF (accessed 14 February 2026).

[9] Ernst & Young, Private Credit in India: H2 2025 Update, page 13.

[10] Reserve Bank of India, Financial Stability Report (December 2025), page 1.

[11] Ernst & Young, Private Credit in India: H2 2025 Update, page 13.

[12] Reserve Bank of India, Exposures of Scheduled Commercial Banks (SCBs) to Non-Banking Financial Companies (NBFCs) – Review of Risk Weights, RBI/2024-25/120 (25 February 2025) accessed 16 September 2025.

[13] Ernst & Young, Private Credit in India: H1 2025 Update, page 30.

[14] Ernst & Young, Private Credit in India: H2 2025 Update, page 32.

[15] Ernst & Young, Private Credit in India: H2 2025 Update, page 31.

[16] Octus, India Private Credit: Deals and Rankings 9M 2025, page 6.

[17] Ernst & Young, Private Credit in India: H1 2025 Update, pages 30–31; Ernst & Young, Private Credit in India: H2 2025 Update (February 2025), page 31.

[18] Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026 accessed 12 March 2026.

[19] Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026 accessed 27 May 2026.

[20] Reserve Bank of India (Commercial Banks – Credit Facilities) Amendment Directions, 2026 (Revised) accessed 1 April 2026.

[21] These directions have been consolidated into the Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025 (and equivalent directions applicable to other types of regulated entities).

[22] The Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014, the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014, and the circulars, notification and guidelines issued under both.

[23] Reserve Bank of India (Commercial Banks – Credit Facilities) Second Amendment Directions, 2026 – Draft for Comments.

[24] Insolvency and Bankruptcy Code (Amendment) Act, 2026, section 2(b).

[25] Insolvency and Bankruptcy Code (Amendment) Act, 2026, section 18(a)(ii).

[26] Insolvency and Bankruptcy Code (Amendment) Act, 2026, section 31(a).

[27] Insolvency and Bankruptcy Code (Amendment) Act, 2026, sections 26, 27, 30.

[28] Insolvency and Bankruptcy Code (Amendment) Act, 2026, section 32(b).

[29] Insolvency and Bankruptcy Code (Amendment) Act, 2026, section 40.

[30] Karnataka Stamp Act 1958, Schedule, article 5(j).

[31] Maharashtra Stamp Act 1958, Schedule 1, article 5(h)(A)(iv).

[32] Chief Controlling Revenue Authority v Costal Gujarat Power Limited and Ors, 2015 (9) SCR 36.

[33] Revenue and Forests Department, Government of Maharashtra, Notification No. Mudrank 2002/875/C.R. 173-M-1 dated 6 May 2002 read with Revenue and Forests Department, Government of Maharashtra, Notification No. Mudrank 2005/C.R.204/M-1 dated 4 June 2005.

[34] Revenue Department, Government of NCT of Delhi, Notification No. F.1(283)/Regn. Br./Div. Com./08/590-51 dated 26 February 2009.

[35] Transfer of Property Act 1882, section 58.

[36] Indian Contract Act 1872, section 172.

[37] PTC (India) Financial Services Ltd v Venkateswarlu Kari, (2022) 9 SCC 704.

[38] World Crest Advisers LLP v Catalyst Trusteeship Limited & Ors, 2023 SCCOnline Bom 1879.

[39] The Companies Act 2013, section 77.

[40] Insolvency and Bankruptcy Code 2016, section 215(2).

[41] For example, see the Transfer of Property Act 1882, section 48.

[42] Registration Act 1908, section 50.

[43] ICICI Bank Limited v Sidco Leathers Limited & Ors, AIR 2006. SC 2088.

[44] Merchant Shipping Act 2025, section 26(5).

[45] Bizloan Private Limited v Amit Chandrashekhar Poddar, 2025 SCC OnLine NCLAT 1120.

[46] Insolvency and Bankruptcy Code 2016, section 43.

[47] Insolvency and Bankruptcy Code 2016, section 45.

[48] Insolvency and Bankruptcy Code 2016, section 49.

[49] Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016, regulation 5.

[50] Insolvency and Bankruptcy Code 2016, section 50.

[51] Republic of Singapore, United Kingdom and Northern Ireland, Hong Kong, United Arab Emirates, Canada, Fiji, Colony of Aden, Federation of Malaya, New Zealand, the Cook Islands (including Niue) and the trust territory of Western Samoa, Trinidad and Tobago, Papua and New Guinea, Bangladesh.

[52] Australia, Austria, Belgium, Botswana, Bulgaria, Canada, Central African Republic, the former Czechoslovak Socialist Republic, Chile, China, Cuba, Denmark, Ecuador, Egypt, Finland, France, Germany (including the former German Democratic Republic), Ghana, Greece, Hong Kong, Hungary, Italy, Japan, Kuwait, Republic of Korea, Malagasy Republic, Malaysia, Republic of Mauritius, Mexico, Morocco, Nigeria, the Netherlands, Norway, Philippines, Poland, Romania, San Marino, Singapore, Spain, Sweden, Switzerland, Syria, Thailand, Trinidad and Tobago, Tunisia, the former Union of Soviet Socialist Republics, the United Kingdom, the United Republic of Tanzania and the United States of America.

[53] GPE (India) Ltd v Twarit Consultancy Services Private Limited, (2025), SLP (C) No. 6856/2023.