Banks are owed $349B by private credit funds that may not be collecting cash from borrowers

Private credit funds can count interest as income even when the borrower hasn't sent them any cash, because some loan contracts let businesses add interest to what they owe. That gives a company more time to pay, but it doesn't extend the same courtesy to the fund, which could have borrowed money from a bank to finance the loan. If you read the Federal Reserve's new private credit accounts alongside its research on bank financing, you'd see that the separation between banks and nonbank lenders essentially disappears. US-domiciled private credit vehicles owed banks $349 billion at the end of 2025, while other research showed borrowers were paying interest with additional debt. The fund can accept that payment method while its lender still expects cash.

BeCrypto News shows a short excerpt and links to the publisher. The full report belongs to CryptoSlate.