State-owned lender, Bank of Baroda on May 10 said that it has reversed Rs 31.32 crore in the March quarter of FY24 from the total Rs 50.49 crore made on the investment in alternative investment funds (AIF).
It was done after the Reserve Bank of India's (RBI) clarification on the AIF provisions guidelines, the public sector bank said in an earnings release on May 10.
“Based on the subsequent clarification issued by RBI vide circular dated March 27, 2024, the Bank has reassessed the provision and accordingly, the Bank has reversed provision of Rs 3132 lakhs during the quarter ended March 2024 in respect of the investment in AIFs,” lender said in a release.
The Reserve Bank of India on December 19 barred regulated entities such as banks, non-bank lenders and home financiers from investing in AIFs which directly or indirectly invested in their borrower companies.
It said lenders which would fail to liquidate their investments within 30 days would need to make 100 percent provision on such investments.
RBI's March clarification
On March 27, the central bank clarified that the definition of such downstream investments would exclude investments in equity shares of a debtor company of the lender. However, the rules would apply to all other investments, including those in hybrid instruments.
Provisioning would be required only to the extent of the lender's investment in the debtor company through the AIF and not on its entire investment in the AIF scheme, the RBI said.
Investments by lenders in AIFs through intermediaries such as a fund-of-funds or mutual funds were not included in the scope of the earlier circular, the central bank said.
The rules were introduced to ensure uniformity in implementation among lenders and to address concerns flagged in various representations received from stakeholders, the RBI said.
Q4 results
The lender reported a net profit of Rs 4,886 crore for the January-March quarter of the financial year 2023-24, which marks a 2.3 percent jump as compared to a net profit of Rs 4,775 crore clocked in the year-ago period.
The bank's gross non-performing asset (NPA) stood at 2.92 percent, down from 3.79 percent in the corresponding quarter last year. On the other hand, net NPA for the quarter stood at 0.68 percent as compared to 0.89 percent a year ago.
Shares of the bank were trading at Rs 265.60 apiece at 2.57 pm on May 10, up 1.09 percent on BSE.
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