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India's private credit funds are increasingly adopting artificial intelligence (AI) for deal sourcing, data analysis and credit assessment, with most players using the technology selectively and a smaller group integrating it more deeply into their investment processes, according to an EY report.
The EY Private Credit Pulse Survey, part of its H1 2026 update, found that 67 per cent of respondents use AI moderately, mainly for data analysis and monitoring, while 11 per cent said AI tools are already core to their origination and credit analysis processes. Another 22 per cent are in the early stages of adoption and are piloting AI tools. The findings point to a gradual shift in how private credit funds assess potential deals and monitor borrowers, although AI adoption remains at different stages across the market. "Most funds have begun using AI selectively, particularly for data analysis, monitoring and underwriting support, while a smaller set of participants have started integrating AI more deeply into origination and credit assessment processes," the report said. The survey forms part of EY's assessment of changing dynamics in India's private credit market, which expanded in the first half of 2026 despite global economic uncertainty, geopolitical tensions and commodity price pressures. According to EY, private credit funds are also seeing demand from stress-related situations, capital expenditure requirements and mergers and acquisitions financing. The broader market remained constructive, with 60 per cent of survey respondents bullish on the asset class over the next one to two years, while 27 per cent were cautious and 13 per cent very bullish. The report also found that 67 per cent of respondents preferred deals targeting returns above 18 per cent, categorised as high-yield, while around 33 per cent targeted returns between 12 per cent and 18 per cent, classified as performing credit. EY said the survey also assessed the impact of geopolitical tensions on deployment activity, with 40 per cent of respondents reporting no change in deployment pace and another 40 per cent saying they had slowed deployment due to greater caution over sectors and geographies. The findings suggest that AI adoption in private credit is likely to deepen as funds move beyond experimentation towards greater use in origination, underwriting and ongoing portfolio monitoring, even as the extent of adoption varies across market participants. (ANI)
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