NEW DELHI: Days after the banking regulator tightened rules for banks and NBFCs investing in schemes of Alternate Investment Funds (AIFs), two NBFCs – Piramal Enterprises (PEL) and IIFL Finance – on Thursday disclosed their exposure to such schemes.
In an exchange filing, Piramal Enterprises said the value of investments by PEL and Piramal Capital & Housing Finance Limited in AIF units was Rs 3,817 crore as of November 30, 2023. The company said Rs 653 crore worth of funds have no exposure to any debtor companies of Piramal Enterprises, while Rs 1,737 crore worth of downstream investments have been made by the AIF into three entities that are (or were in the last 12 months) debtor companies of PEL. The company further said it intends to adjust the entire Rs 3,164 crore in its financial statements through capital funds or provisions.
The RBI on December 19, 2023, issued a circular asking all entities regulated by it to avoid having indirect exposure to their existing borrowers through AIFs such as private equity or debt funds, hedge funds, etc.
As per the circular, if an AIF scheme invests in an existing borrower of a bank (or an NBFC), it must liquidate its investment in the scheme within 30 days. In case if the banks are not able to liquidate their investments within the above-prescribed time limit, they will have to make 100% provision on such investments.
PEL further said it is confident of full recovery of the underlying downstream investments in the impacted AIF units. PEL has received Rs 905 crore so far as repayment of interest and principal on these units, it added. Meanwhile, IIFL Finance in an exchange filing informed that there is an Investment of Rs 21.37 crore in IIFL Fintech Fund where the company has outstanding debt exposure of Rs 3.28 crore in one of the downstream investments of the fund.