Adobe StockThe Private Credit Expansion: Bridging the GCC-India financing gap
How non-bank capital is creating high-yield, equity-like opportunities while solving for bank retrenchment and RERA-driven liquidity constraints.
February 15, 2026Real Estate
Written by:Jorge Aguinaga
Executive Summary
The financing landscape for real estate in the GCC and India has reached a structural milestone, shifting from bank-led models to sophisticated non-bank financial intermediation. As commercial banks retrench, a vital financing gap has emerged, now being filled by private credit structures that provide the flexibility required for high-velocity development.
GRI’s GCC-India Week 2026, sponsored by JLL, convened industry leaders to interrogate these shifting dynamics. This article synthesises those insights, focusing on how Asset-Backed Financing (ABF) and RERA-mandated escrow discipline are creating high-yield, equity-like opportunities while mitigating execution risk in the cross-border corridor.
GRI’s GCC-India Week 2026, sponsored by JLL, convened industry leaders to interrogate these shifting dynamics. This article synthesises those insights, focusing on how Asset-Backed Financing (ABF) and RERA-mandated escrow discipline are creating high-yield, equity-like opportunities while mitigating execution risk in the cross-border corridor.
Key Takeaways
- As traditional banks become more selective, non-bank financial intermediation has transitioned from an alternative to a primary source of capital for high-growth development.
- Specialised bridge loan funds are currently delivering high-teen returns in USD terms, providing investors with a predictable yield cushion that effectively offsets currency and tax complexities.
- The enforcement of RERA-mandated escrow accounts and milestone-linked withdrawals has eliminated the risk of capital migration, ensuring that funds are used exclusively for their intended project costs.
The financing landscape for real estate in the GCC and India has reached a critical juncture where traditional banks are no longer the primary engine of growth.
As of 2026, a structural pivot toward non-bank financial intermediation has taken hold, driven by a combination of stringent regulatory caps on bank lending and the rising sophistication of private capital providers.
This shift represents a move away from the rigid, collateral-heavy requirements of commercial banks toward more agile, private credit structures that are better suited for the high-velocity development cycles of the current market.
In India, the sector still grapples with the fallout of the NBFC (Non-Banking Financial Company) crisis in 2018-2019, leaving formal liquidity for developers constrained. This vacuum is being filled by private credit, which has grown into a cornerstone of the regional financing playbook.
Unlike banks, private credit lenders often underwrite based on forward-looking cash flow assumptions and the sponsor’s track record, offering the speed of execution and flexible structuring required for complex developments.
In India, private credit assets under management surged from just USD 0.7 billion in 2010 to over USD 17.8 billion by 2023.
Consequently, many institutional players now underwrite deals assuming fixed levels of rupee depreciation rather than paying for expensive market hedges.
As of 2026, a structural pivot toward non-bank financial intermediation has taken hold, driven by a combination of stringent regulatory caps on bank lending and the rising sophistication of private capital providers.
This shift represents a move away from the rigid, collateral-heavy requirements of commercial banks toward more agile, private credit structures that are better suited for the high-velocity development cycles of the current market.
The Financing Gap
Traditional banks in India and the GCC have become increasingly retrenched, remaining highly selective and focused primarily on standardised, lower-risk, asset-backed lending.In India, the sector still grapples with the fallout of the NBFC (Non-Banking Financial Company) crisis in 2018-2019, leaving formal liquidity for developers constrained. This vacuum is being filled by private credit, which has grown into a cornerstone of the regional financing playbook.
Unlike banks, private credit lenders often underwrite based on forward-looking cash flow assumptions and the sponsor’s track record, offering the speed of execution and flexible structuring required for complex developments.
In India, private credit assets under management surged from just USD 0.7 billion in 2010 to over USD 17.8 billion by 2023.
The "Equity-Like" Return
For GCC investors, private credit is not merely a debt instrument; it is a high-yield opportunity that mirrors equity returns without the same level of downside risk.- Target Returns: Investors are increasingly exploring bridge loan funds targeting high-teen equity IRRs in USD terms.
- Yield Performance: In the current market, most private credit structures in India delivered 12-18% annual returns through 2024 and 2025.
- Leverage Strategy: In the GCC, private developers must often deploy significant upfront equity - up to 20% of project costs - to satisfy stringent escrow regulations, making mezzanine and bridge financing essential for maintaining operational liquidity.
The Cost of Capital Reality
The most significant friction for cross-border private debt remains foreign exchange (FX) risk. Investors frequently find that the market cost of currency hedging can escalate the price of USD-denominated debt (initially 4-5%) to over 12% post-hedging, bringing it in line with domestic loan rates.Consequently, many institutional players now underwrite deals assuming fixed levels of rupee depreciation rather than paying for expensive market hedges.
Participants at the GRI GCC-India Week 2026 agreed that non-bank financial intermediation is no longer just an alternative, but a structural necessity for bridging the financing gap created by traditional bank retrenchment in the cross-border corridor. (GRI Institute)
RERA’s Role in Debt Security
The implementation of Real Estate Regulatory Authorities (RERAs) in both India and the GCC has provided the governance floor necessary for private credit to scale.
Escrow Discipline
Historically, the primary risk for lenders in India was the diversification of funds - where developers would use cash flows from one successful project to acquire new land for another, often leaving the original project under-capitalised.
RERA’s strict escrow mandate has fundamentally transformed lender confidence by enforcing fund ring-fencing. In India, developers are now required to deposit 70% of all project receivables into a dedicated, project-tied escrow account.
This structure ensures that capital remains within the project's specific financial structure, making it impossible for developers to divert funds to other ventures or settle unrelated corporate debts.
In the GCC, liquidity management is even more stringent, with some jurisdictions implementing escrow regimes where nearly all funds remain locked until specific milestones are met.
These strict rules often require private developers to deploy up to 20% of their own equity upfront to fund land acquisition and design before they can even access escrowed buyer capital. This high barrier to entry ensures that developers have significant financial commitment to the project, further securing the position of private credit providers.
RERA’s strict escrow mandate has fundamentally transformed lender confidence by enforcing fund ring-fencing. In India, developers are now required to deposit 70% of all project receivables into a dedicated, project-tied escrow account.
This structure ensures that capital remains within the project's specific financial structure, making it impossible for developers to divert funds to other ventures or settle unrelated corporate debts.
In the GCC, liquidity management is even more stringent, with some jurisdictions implementing escrow regimes where nearly all funds remain locked until specific milestones are met.
These strict rules often require private developers to deploy up to 20% of their own equity upfront to fund land acquisition and design before they can even access escrowed buyer capital. This high barrier to entry ensures that developers have significant financial commitment to the project, further securing the position of private credit providers.
Transparency
RERA has successfully shifted the monitoring burden from the lender to a regulated framework of certified professionals, ensuring that every dollar of private credit or buyer capital is accounted for before release.
Under this system, funds can only be withdrawn in proportion to the actual percentage of project completion. This process is governed by rigorous professional oversight, as every withdrawal request must be verified and signed off by a trio of independent professionals: an architect, an engineer, and a chartered accountant.
In many GCC markets, transparency is further enhanced through real-time progress tracking, where RERA teams conduct physical audits and provide construction percentage reports online.This allows investors to visualise the exact progress of their capital deployment in real-time.
Ultimately, this mandatory stage-wise withdrawal ensures that capital is used exclusively for construction and land-related costs, significantly reducing execution risk and the likelihood of project abandonment or unsold inventory.
Under this system, funds can only be withdrawn in proportion to the actual percentage of project completion. This process is governed by rigorous professional oversight, as every withdrawal request must be verified and signed off by a trio of independent professionals: an architect, an engineer, and a chartered accountant.
In many GCC markets, transparency is further enhanced through real-time progress tracking, where RERA teams conduct physical audits and provide construction percentage reports online.This allows investors to visualise the exact progress of their capital deployment in real-time.
Ultimately, this mandatory stage-wise withdrawal ensures that capital is used exclusively for construction and land-related costs, significantly reducing execution risk and the likelihood of project abandonment or unsold inventory.
The Rise of Asset-Backed Financing (ABF)
As we progress further into 2026, the trend is shifting toward Asset-Backed Financing (ABF), which is becoming a cornerstone of private credit portfolios.
Unlike traditional corporate lending that relies on a company's overall financial health and projected earnings, ABF provides capital against clearly defined sets of tangible collateral, such as real estate, equipment, or receivables.
This model is fundamentally decoupled from the corporate credit cycle because the driver of repayment is the cash flow profile of a specific pool of collateral rather than the operational success of a business.
This provides structural resilience during economic downturns; even if a borrower's business struggles, lenders can often recover the full value of the loan by selling the underlying assets.
Furthermore, ABF deals often feature investor-friendly protections such as bankruptcy remoteness, overcollateralisation, and professional servicing that shield capital from broader systemic shocks.
The strategic takeaway is clear: success in the current cycle is no longer about securing a simple loan; it is about building strategic partnerships with private credit platforms that can provide the flexible fuel for high-growth pipelines.
Private credit platforms offer advantages like speed, confidentiality, and bespoke financing solutions that traditional banks historically would not provide.
By aligning with experienced managers who focus on granular underwriting and transparent, institutionally focused strategies, developers can fund rapid expansion even when they do not generate enough free cash flow for conventional financing.
Thank you to everyone who participated in the GRI GCC-India Week Summit.
Unlike traditional corporate lending that relies on a company's overall financial health and projected earnings, ABF provides capital against clearly defined sets of tangible collateral, such as real estate, equipment, or receivables.
This model is fundamentally decoupled from the corporate credit cycle because the driver of repayment is the cash flow profile of a specific pool of collateral rather than the operational success of a business.
This provides structural resilience during economic downturns; even if a borrower's business struggles, lenders can often recover the full value of the loan by selling the underlying assets.
Furthermore, ABF deals often feature investor-friendly protections such as bankruptcy remoteness, overcollateralisation, and professional servicing that shield capital from broader systemic shocks.
The strategic takeaway is clear: success in the current cycle is no longer about securing a simple loan; it is about building strategic partnerships with private credit platforms that can provide the flexible fuel for high-growth pipelines.
Private credit platforms offer advantages like speed, confidentiality, and bespoke financing solutions that traditional banks historically would not provide.
By aligning with experienced managers who focus on granular underwriting and transparent, institutionally focused strategies, developers can fund rapid expansion even when they do not generate enough free cash flow for conventional financing.
Thank you to everyone who participated in the GRI GCC-India Week Summit.