Banks hold $349B exposure to private credit funds using non-cash interest

Community Trust Score Verified 95 % Real Verified 21 votes Updated 6 minutes ago Banks are owed $349 billion by private credit funds, a figure that highlights a structural risk in how these funds recognize income. The exposure stems from the practice of counting interest as income even when the borrower has not sent cash, a mechanism enabled by specific loan contract terms. Private credit funds can record interest as income despite the absence of cash flow from borrowers.