Piramal Plans Adjustment of Rs 3,164 Crore AIF Exposure to Adhere to New RBI Directive

Piramal Enterprises recently announced its strategic move to align with the latest RBI norms by adjusting the exposure of Rs 3,164 crore in Alternative Investment Funds (AIFs) within its financial statements. In compliance with regulatory requirements, the company disclosed in a Thursday exchange filing that the total investments by Piramal Enterprises and Piramal Capital and Housing Finance in AIF units amounted to Rs 3,817 crore as of November 30. However, a portion of Rs 653 crore is attributed to funds without any links to debtor companies associated with PEL.

Breaking down the remaining Rs 3,164 crore, Piramal revealed that Rs 1,737 crore of downstream investments have been made by the AIF into three entities, which have been debtor companies of PEL (consolidated) in the last 12 months. Despite this, Piramal expressed confidence in the complete recovery of the underlying downstream investments in the affected AIF units. The firm emphasized that PEL (consolidated) has already received Rs 905 crore in repayment of interest and principal on these units.

In response to the RBI's recent directives on Tuesday, which prohibit banks and NBFCs from investing in AIFs with any downstream investment in debtor companies, Piramal Enterprises is proactively adjusting its financial stance. The RBI's guidelines stipulate that lenders must liquidate their investments in AIFs within 30 days if the fund invests in an existing borrower. Failure to do so will necessitate a 100 percent provision on these investments, as per the RBI's directive. This move underscores Piramal Enterprises' commitment to regulatory compliance while maintaining optimism about the recovery of its AIF investments.

(With Agency Inputs)