SBI responds to regulatory changes, allocates Rs 240 Crore for AIFs

New Delhi: In the December quarter, State Bank of India (SBI), the country’s largest lender, disclosed a provision of Rs 240 crore related to its investments in alternative investment funds (AIFs), according to Chairman Dinesh Khara. He mentioned during a press conference following the quarterly results announcement that the bank’s overall exposure to AIFs stands at approximately Rs 1,000 crore. The provision was made in response to regulatory guidelines issued by the Reserve Bank of India (RBI) on December 19, which prohibited banks, non-bank lenders, and home financiers from investing in AIFs linked to companies that have borrowed from these financial institutions. The RBI expressed regulatory concerns about certain transactions involving AIFs, emphasizing the substitution of direct loan exposure with indirect exposure through AIF investments. Notably, other financial institutions such as HDFC Bank, Kotak Mahindra Bank, and Axis Bank also made provisions in response to these guidelines. For instance, Kotak Mahindra Bank allocated a provision of Rs 143 crore, while Axis Bank set aside Rs 182 crore.