Entities found to be taking AIF route to breach regulations: Ananth Narayan

Mumbai: The Securities and Exchange Board of India (Sebi) has noticed entities using the alternative investment fund (AIF) structure on several occasions to circumvent regulations, its whole-time member Ananth Narayan said on Thursday.

The regulator found entities breaching the spirit of the law while doing inspections and from market intelligence, he said.

"We have seen AIFs being used by certain financial institutions to avoid recognition of non-performing assets, to effectively evergreen some assets. AIFs are being used to have fresh funding come into a stressed borrower which is being used to repay the original lender, with a junior tranche being subscribed to in an AIF," Narayan said at the CII AIF summit.


The regulator has observed AIFs being used to circumvent sectoral cap as well, he said.