RBI issues advisory on banks' investments in alternative investment funds

economictimes.indiatimes.com:

Reserve Bank of India on Wednesday issued an advisory regarding banks' investments in alternative investment funds (AIFs), giving banks directions on the extent of their investments in these funds.
Banks need to only set aside provisions to the extent of their investment in the AIF scheme which is further invested by the AIF in the debtor company, and not on the lender's entire investment in the AIF scheme, the central bank said in a release.

«With a view to ensuring uniformity in implementation among the REs, it is advised [that] downstream investments shall exclude investments in equity shares of the debtor company of the RE, but shall include all other investments, including investment in hybrid instruments,» the release reads.

The central bank's instructions are applicable to all commercial banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks), all Primary (Urban) Co-operative Banks/State Co-operative Banks/ Central Co-operative Banks, all All-India Financial Institutions, and all Non-Banking Financial Companies (including Housing Finance Companies).