RBI tightens rules for lenders investing in alternative investment funds

India's central bank on Tuesday asked entities regulated by it, including banks and non bank finance companies (NBFCs), to stay away from investing in alternate investment funds which have investments in existing and recent borrowers. The Reserve Bank of India also said that lenders would need to liquidate their investment in AIFs within 30 days should the fund invest in an existing borrower.

If the regulated entity is unable to liquidate investments within 30 days, they shall be required to make 100% provisions on these investments, the RBI said.