RBI Tightens Norms For Banks, NBFCs Investing In AIFs

RBI Tightens Norms For Banks, NBFCs Investing In AIFs

SUMMARY

In November last year, the Securities and Exchange Board of India informed RBI about instances of non-bank financiers evergreening loans through the AIF route

Banks and NBFCs resort to such loans to showcase a low percentage of non-performing assets in their books

To address concerns relating to possible evergreening through the AIF route, RBI has issued these guidelines

The Reserve Bank of India (RBI) has issued guidelines to all regulated entities including banks and non-banking financial companies (NBFCs) to not make investments in any alternative investment funds (AIFs) that have invested in a borrower or investee of that lender.

In November last year, the Securities and Exchange Board of India (SEBI) informed RBI about instances of non-bank financiers evergreening loans through the AIF route.

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