RBI has noticed investments by regulated institutions (REs including Banks, NBFCs, and FIs) in AIFs, who have also funded companies that have taken loans from RE.
Banks and NBFCs should ensure that credit growth at the overall, sectoral, and sub-sectoral levels remain sustainable and all forms of exuberance are avoided; credit risk should also be priced properly. Lenders are relying on ALM mismatch to sustain margins through overreliance on short-term bulk deposits.