RBI Says:Banking sector regulator Reserve Bank of India (RBI) has banned the system of taking new loans to repay old loans through Alternative Investment Funds (Evergreening of Loans). A big decision has been taken regarding installation. RBI has advised banks, financial institutions along with housing finance companies to avoid doing this.
According to the advisory of RBI (Reserve Bank of India), banks and non-banking financial companies (NBFCs) cannot invest in any scheme of the Alternative Investment Fund (AIF) which has received loans from the financial institution in the last 12 months. Have invested directly or indirectly in the lender's company. Actually, banks and NBFCs invest in AIF units as part of their regular investment activities.
Last month, stock market regulator SEBI had shared information about investing through AIF with RBI. Then the SEBI official had said that the data has been shared with RBI. RBI said that AIFs are involved in some transactions of banks and NBFCs. This has raised concerns at the regulatory level.
The Reserve Bank said that through this, it has taken steps to stop the arrangement of new loans to repay the old loans through AIF. Banks and NBFCs cannot invest in any scheme of an AIF which has invested directly or indirectly in the company of the lender taking loan from the financial institution. Also, RBI has told financial institutions that such investments will need to be closed within 30 days. According to RBI, if banks and NBFCs are not able to close the investment within the stipulated time, they will have to make 100 percent provision for such investment.
Also read < /p>
Get more latest business news updates