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RBI Gives Lenders A Breather On AIF Investments

Inc42 · 1y ago

RBI Gives Lenders A Breather On AIF Investments

The Reserve Bank of India (RBI) has relaxed investment norms for banks and non-banking financial companies (NBFCs) in alternative investment funds (AIFs), following representations from stakeholders. The move aims to address concerns related to the potential misuse of funds. According to the new circular, downstream investments in equity shares are allowed, but not in hybrid instruments. Investments through Funds of Funds or Mutual Funds are also excluded. However, there are concerns regarding the exclusion of private equity and venture capital investments in the form of instruments such as CCPS and CCDs.

Related News

Piramal Enterprises to provision for AIF exposure as RBI tightens rules

VCCircle

VCCircle · 1y ago

Piramal Enterprises to provision for AIF exposure as RBI tightens rules

Piramal Enterprises will make provisions for certain exposures to investments in alternate investment fund (AIF) units, in response to new rules set by the Reserve Bank of India (RBI). The RBI has barred regulated entities from investing in AIFs with investments in borrowers in the past 12 months. Piramal's AIF investments amount to INR 38.17bn ($458.78m), and the company intends to adjust these funds through capital or provisions. Jefferies estimates the provisioning could have a 10% impact on Piramal's net worth.

RBI proposes easier rules for lenders' investments in AIFs

VCCircle

VCCircle · 3m ago

RBI proposes easier rules for lenders' investments in AIFs

The Reserve Bank of India (RBI) has proposed easing investment rules for lenders in Alternative Investment Funds (AIFs), citing improved financial discipline. The draft guidelines suggest capping a single regulated entity’s investment in an AIF at 10% of its corpus, with a total combined limit of 15% for all lenders. Lenders could invest up to 5% of an AIF’s corpus without restrictions but might need to make provisions if certain conditions are breached.

RBI caps investment by a bank in AIF scheme at 10 per cent

Economic Times

Economic Times · 1m ago

RBI caps investment by a bank in AIF scheme at 10 per cent

The Reserve Bank of India (RBI) has imposed a 10% cap on the investment by a single regulated entity (RE), such as banks and non-banking financial companies (NBFCs), in an Alternative Investment Fund (AIF) scheme. Additionally, collective contributions by all REs in an AIF scheme are capped at 20%. These revised guidelines, considering industry feedback and Sebi regulations, aim to strengthen the regulatory framework related to investments in AIF schemes.

The impact of RBI rules for AIF investments by banks, NBFCs and the way ahead

VCCircle

VCCircle · 1y ago

The impact of RBI rules for AIF investments by banks, NBFCs and the way ahead

The Reserve Bank of India (RBI) has imposed restrictions on banks, non-banking financial companies (NBFCs), and other regulated entities from investing in alternative investment funds (AIFs) that have portfolio investments in entities that are borrowers or investees of these regulated entities. The move aims to address concerns about evergreening of loans. The RBI has also mandated that regulated entities must liquidate their investments in AIFs within 30 days of such investments being made. However, this ruling may pose challenges for AIF managers in meeting funding obligations and may lead to increased costs and reliance on foreign institutional capital.

RBI imposes curbs on banks, NBFCs’ investments in private credit funds, other AIFs

VCCircle

VCCircle · 1y ago

RBI imposes curbs on banks, NBFCs’ investments in private credit funds, other AIFs

The Reserve Bank of India (RBI) has imposed curbs on banks and NBFCs investing in private credit funds and other alternative investment funds (AIFs) to prevent the evergreening of bad loans. The central bank stated that financial institutions cannot invest in AIFs with downstream investments in a company that has taken a loan from them. This measure aims to address regulatory concerns over transactions involving AIFs that involve indirect exposure to borrowers through investments. The RBI also specified that if an AIF makes an investment in a debtor company, banks and NBFCs must liquidate their investment within 30 days or make 100% provision on it.

RBI eases recently tightened rules for investments by banks, NBFCs in AIFs

VCCircle

VCCircle · 1y ago

RBI eases recently tightened rules for investments by banks, NBFCs in AIFs

India's central bank, the Reserve Bank of India (RBI), has eased its recently tightened rules on investments by banks and non-banking finance companies (NBFCs) in alternative investment funds (AIFs). The rules, which required higher provisions to be set aside, were originally put in place to address concerns about the use of AIFs to mask bad loans. However, the RBI has now clarified that banks only need to cover the portion of their investment in an AIF that is further invested in the debtor company.

Breather For Bank Of Baroda As RBI Allows Onboarding Customers Via Bob World App

Inc42 · 1y ago

Breather For Bank Of Baroda As RBI Allows Onboarding Customers Via Bob World App

The Reserve Bank of India (RBI) has lifted restrictions on Bank of Baroda, allowing the bank to onboard customers through its mobile banking application, 'Bob World'. The central bank had asked the bank to suspend onboarding customers on its app in October 2020 due to supervisory concerns. Bank of Baroda confirmed that the RBI lifted the curbs with immediate effect in a letter dated May 8. The bank is now permitted to resume onboarding new customers through the app in compliance with regulatory guidelines.

Paytm Shares Tank Over 9 Per Cent After Two-Day Breather

OutlookIndia

OutlookIndia · 1y ago

Paytm Shares Tank Over 9 Per Cent After Two-Day Breather

Shares of Paytm's parent company, One97 Communications, dropped more than 9% after a two-day rally. The stock had initially climbed 10% on Wednesday but fell sharply following RBI's recent crackdown on Paytm Payments Bank. The RBI ordered the bank to cease taking deposits and conducting credit transactions, leading to a significant decline in market valuation for Paytm. Founder Vijay Shekhar Sharma holds a 51% stake in the bank.

RBI, SEBI mull exemptions for recent AIF investment rules

VCCircle

VCCircle · 1y ago

RBI, SEBI mull exemptions for recent AIF investment rules

India's Reserve Bank and market regulator, SEBI, are reportedly considering exemptions to recently tightened rules on bank investments in alternative investment funds (AIFs) due to unintended consequences. Last month, the RBI ruled that banks and non-bank lenders cannot invest in AIFs with holdings in the banks' current or recent borrowers. However, the industry claims these rules could hinder growth and impact around $8-10bn of investments. The regulators are said to be considering exemptions for funds investing in distressed assets and banks have requested more time or staggered provisions to exit such investments.

RBI Governor Says ‘Hardly Any Room’ To Review Action On Paytm Payments Bank

Inc42 · 1y ago

RBI Governor Says ‘Hardly Any Room’ To Review Action On Paytm Payments Bank

RBI Governor Shaktikanta Das stated that there is "hardly any room" to reconsider the action taken against Paytm Payments Bank after the recent regulatory restrictions imposed by the Reserve Bank of India (RBI). He emphasized that the central bank gives sufficient time for regulated entities to rectify any shortcomings before taking action. The RBI had provided Paytm Payments Bank with one month to ensure minimal inconvenience for customers. FAQs on the matter will be released later this week.

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