Apex PE-VC body seeks govt's help to ease AIF curbs
Indian Venture and Alternate Capital Association, or IVCA, is reportedly in discussions with central government officials to help ease the wide-ranging curbs the banking regulator imposed earlier this week on Alternative Investment Funds (AIFs), potentially choking institutional fund flows to a high-risk and hitherto lightly regulated investment vehicle experts believe could be misused to evergreen doubtful corporate loans.
SIDBI, which loans funds to small industries, and various AIFs are simultaneously seeking clarity or relief amid the sudden changes in AIF investments ordered by the Reserve Bank of India (RBI).
«The industry association had a meeting with senior government officials and expects some relief or clarity within the next 30 days,» said a source at the grouping that represents the interests of private equity and venture funds.
An IVCA spokesperson declined to comment on the specifics as the discussions are on. The industry has flagged its concerns to the government and the finance ministry is examining these, a senior government official told ET.
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.
The RBI has prohibited investments in AIFs by mainstream banks and non-banking financial companies (NBFCs), with a requirement for divestment if lending institutions have invested in AIF units that also lent to a company borrowing from the same institution.
Provisions for cases where banks or NBFCs invest in AIFs that subsequently lend to their own borrowing companies have
