These are among the key proposals made by the fund industry body in its representation to the Reserve Bank of India (RBI) in the wake of the central bank's sweeping measures, a person familiar with the subject told ET. The strict dos and don'ts imposed by RBI in a circular on December 19 are aimed at restraining lenders from using AIFs to move funds to help near-delinquent borrowers and hide the stress on loan books.
The Indian Venture and Alternate Capital Association (IVCA) lobby group has approached the government, concerned that the measure will impact the flow of funds to the startup sector, ET reported on Friday. The RBI had been keeping a close watch on these practices for the past several months and clamped down after investments rose sharply, said a person familiar with the details.
The industry is concerned about the close-ended nature of AIFs, where institutions with existing lending relationships with investee portfolio entities face a tight 30-day timeline from December 19, 2023, to liquidate investments, failing which they must provision 100% for such investments.
As of November 30, the value of investments by Piramal Enterprises and Piramal Capital and Housing Finance in AIF units was Rs 3,817 crore. Out of this, Rs 653 crore pertains to funds that have no exposure to any debtor companies of PEL.
A Reserve Bank of India (RBI) circular issued Tuesday prohibits banks and NBFCs from investing in AIFs to prevent questionable asset transfers. This will affect large banks and NBFCs involved in AIF investments. "This RBI measure imposes significant requirements on banks and NBFCs," said Sai Krishna Bharathan, Partner, Trilegal.
In a circular on Monday, Sebi said managers of AIFs will continue to reach out to existing investors to obtain their demat account details and credit the units issued to them to their respective demat accounts. The dematerialisation of AIF units is seen as a significant move towards digitisation, fostering transparency, and enabling effective monitoring of transactions in the financial landscape.
In a move to enhance transparency and align with global financial reporting standards, the Reserve Bank of India (RBI) has introduced significant changes to the classification, valuation, and operation of commercial banks' investment portfolios.
Banks have been asked to classify their investment portfolio into three categories: HTM, Available for Sale (AFS), and Fair Value through Profit and Loss (FVTPL).
The government is expediting the sale of a majority stake in IDBI Bank. Several Indian private banks including Kotak Bank, large NBFCs and foreign funds fit the bill.
With yields under pressure, the focus is shifting to providing customised and lower-cost performing credit to finance growth and the new capex cycle.
Financial services platform KFin Technologies has raised Rs 675 crore from anchor investors.
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