MUMBAI, Dec. 8 -- India's private-credit market is in the midst of its busiest phase yet, with a wave of domestic and global investment firms rushing in as companies seek faster, more flexible capital than traditional lenders can provide.

Over the past 12 to 18 months, firms from DMI Alternatives and Ascertis Credit to Motilal Oswal Alternates, ASK Group, True North, Edelweiss, Multiples Alternate Asset Management, Prabhudas Lilladhar and Vivriti Asset Management have launched new funds, while heavyweights such as Blackstone Group and Bandhan AMC are setting up dedicated platforms. The National Investment and Infrastructure Fund (NIIF) has also announced a $2 billion plan aimed at drawing global capital into the asset class.

This surge ...