Sebi to create separate AIF category for buying distressed loans from banks

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Securities and Exchange Board of India is keen on carving out a separate category in Alternative Investment Funds (AIF), in which entities can purchase distressed loans from banks and non-banking finance companies (NBFCs). The number of AIFs have been growing in the last one year. About 90 new AIFs got registered with the regulator under different categories in the last financial year, taking the total count to more than 700, Sebi chairperson Ajay Tyagi said on Thursday.

He also added that the cumulative investments by AIFs increased to around Rs 2 lakh crore from Rs 1.5 lakh crore, in a year.

While speaking at the 12th CII Financial Market Summit, Tyagi said that, AIFs have the potential to attract large amount of capital and can be a suitable vehicle to channel funds from sophisticated investors, individual and institutional, to purchase distressed loans from banks and NBFCs.

Corporates should consider BRSR norms

Another area of focus would be the Environmental, Social and Governance (ESG) aspects of the asset management industry, he said.

While on one hand, there is increasing demand for ESG investments and disclosures, on the other hand, there are also concerns about green washing, he added.

He further said that the regulator is presently engaging with the industry about disclosing certain parameters related to ESG in respect of such schemes. He also acknowledged the pick-up in launching of ESG-themed schemes by mutual funds in India in the last couple of years.

Sebi chief asked corporates houses to consider adopting BRSR (Business Responsibility and Sustainability Report) norms this financial year itself. This may also facilitate attracting global capital targeted towards better governed companies.

Tyagi also requested corporates to consider adopting BRSR (Business Responsibility and Sustainability Report) norms in this financial year itself. This might also help in bringing global capital for companies that are better governed.

The BRSR requirement are given on a voluntary basis to the top 1,000 listed entities for the financial year 2021-22. but will be mandatory starting from financial year 2022-23.