Mumbai, Nov. 11 -- Foreign capital is increasingly flowing into India's non-banking financial companies (NBFCs), with global private equity (PE) firms and financial institutions buying stakes in established lenders amid intensifying competition and rising credit demand.

On Tuesday, the world's largest alternative asset manager Blackstone Inc. announced its plan to invest Rs.5,000 crore in IIFL Finance Ltd for an approximately 16% stake.

The investment, part of IIFL's Rs.6,414-crore capital raise, comes days after PE firm TPG's Rise Funds agreed to invest an initial Rs.525 crore in Kirloskar Group-backed Arka Fincap Ltd, with the possibility of infusing another Rs.275 crore subject to business milestones and regulatory approvals.

Indian...