Days after the Reserve Bank of India (RBI) tightened norms for lenders investing in alternative investment funds (AIF), Piramal Enterprises on Thursday said it will make provisions for Rs 3,164 crore worth of investments in AIF units.The company and its subsidiary Piramal Capital & Housing Finance have a total exposure of Rs 3,817 crore in AIFs as of November 30, it said.“Taking a conservative view of the regulatory intent, Piramal Enterprises intends to adjust the entire Rs 3,164 crore in our financial statements through capital funds or provisions,” said the company in an exchange filing. “We are engaging with relevant stakeholders to finalise the details.”

The company is confident of full recovery of the underlying downstream investments in the impacted AIF units. Shares of Piramal Enterprises fell 3% to close at Rs 882 on Thursday.The RBI on Tuesday barred all entities under its regulation, including banks and non-banking finance companies, from investing in AIFs that have investments in borrowers in the past 12 months.According to the RBI direction, regulated entities must liquidate their investments in AIFs within 30 days should the fund invest in an existing borrower. Failure to comply mandates the entity to make full provisions on these investments.Jefferies estimates Piramal’s AIF exposure to be 7% of its assets under management and said provisioning for it could lead to a 10% hit to its net worth.Meanwhile, IIFL Finance said it has an investment of Rs 21.37 crore in a fund with a debt exposure of Rs 3.28 crore. The firm’s remaining AIF investments, totaling Rs 909.8 crore as of December 21, carry no exposure to existing debtors and will not impact its additional provisioning or capital adequacy needs, it said. Shares of Piramal Enterprises fell 4% to close at Rs 595 on Thursday.