Piramal to provide for 83% of its AIF investment, IIFL Finance does not see any impact

The company so far has received Rs 905 crore as repayment of interest and principal on these units.

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26 Aug, 2025 12:21

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Piramal Enterprises on December 21 has disclosed its investments in AIFs, stating that as of November 2023, the value of investments made by the company and its subsidiaries in AIFs was Rs 3,817 crore, according to the exchange filing.

The company intends to adjust Rs 3,164 crore of this amount in its financial statements through capital funds or provisions, as a conservative measure. Piramal Enterprises is currently working with relevant stakeholders to provide further details on the financing of this adjustment.

Also Read: Piramal, Edelweiss and other NBFCs under scanner as RBI cracks whip on loan evergreening via AIFs

The release also reveals that out of the remaining Rs 3,164 crore (Rs 3,817 crore investments minus Rs 653 crore with no exposure), downstream investments worth Rs 1,737 crore have been made by AIFs into three entities that are (or were in the last 12 months) debtor companies of Piramal Enterprises.

The company so far has received Rs 905 crore as repayment of interest and principal on these units.

As of September 30, Piramal Enterprises has a consolidated net worth of Rs 28,710 crore and a capital adequacy of 31 percent. Piramal Enterprises also added that they are engaging with relevant stakeholders to finalise the details.

Meanwhile, IIFL Finance informed that it has an investment of Rs 21.37 crore in IIFL Fintech fund where the company has outstanding debt
exposure of Rs 3.28 crore in one of the downstream investments of the fund.

Also Read: Explained | Why the RBI barred lenders from investing in AIFs linked to borrower companies

Further, all other AIF investments of IIFL Finance aggregating to Rs 909.81 crore does not include any downstream investments to which it has a loan or investment exposure currently or in the preceding twelve months.

"Thus, such investments in the fund shall have no impact with regard to requirement of additional provisioning or capital adequacy of the company. These investments are carried at fair value basis the NAV published periodically by the AIF," the company said in the exchange filing.

Separately, IIFL Finance's material subsidiary IIFL Home Finance holds investment of Rs 161.07 crore in an AIF under “Priority Distribution Model”. If this investment is not liquidated within 30 days then it will require 100 percent deduction from capital, as per RBI's regulation.

"However, the subsidiary is adequately capitalizsed having a CRAR of 47.55 percent as on September 30, 2023 and the impact of this deduction shall reduce the CRAR to 46.39 percent if reinstated as of September 30,2023," th NBFC said.

What are RBI regulations?

The Reserve Bank of India (RBI) introduced regulations on Tuesday that prevent banks and NBFCs from utilising the AIF route to 'evergreen' their loans. The RBI's move is aimed at stopping banks and NBFCs from using the AIF channel as a way to artificially sustain or extend the life of their loans.

In a press release, the RBI highlighted regulatory concerns regarding certain transactions involving AIFs by regulated entities that have come to its notice and released guidelines for investments in AIFs by the lenders regulated by it.

Also Read: MC Explains: After SEBI, why RBI cracks whip on lenders hiding stressed assets with AIFs

“These transactions entail substitution of direct loan exposure of REs to borrowers, with indirect exposure through investments in units of AIFs,” the RBI said.

As per the guidelines, Regulated entities (REs) shall not make investments in any scheme of AIFs which has downstream investments either directly or indirectly in a debtor company of the RE.

The RBI said lenders need to liquidate its investment in the scheme within 30 days if the AIF scheme, in which lenders are already investors, makes a downstream investment in any such debtor company, the RBI said.

Further, if lenders have already invested into schemes having downstream investment in their debtor companies as on date, the 30-day period for liquidation shall be counted from date of issuance of this circular, the RBI added.