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Mint
20-05-2025
- Business
- Mint
Bank, NBFC investments in AIFs may get smoother
Banks, non-bank lenders and financial institutions may get to invest up to 10% in the corpus of alternate investment fund (AIF) schemes, in a relief for the sector that faced a central bank clampdown in December, 2023. There will be no restriction on regulated entities (REs) such as banks for investing up to 5% in the AIF scheme's corpus, Reserve Bank of India (RBI) proposed on Monday. However, if the AIF scheme invests in a company that has borrowed from the bank, then the RE must make full provision to the extent of its proportionate exposure, the draft circular said. Again, total investments by all REs in any AIF scheme will be capped at 15% of the scheme corpus. 'Notwithstanding, if the RE's contribution is in the form of subordinated units under the priority distribution model (PDM), it shall deduct the entire investment from its capital funds— equally from both Tier-1 and Tier-2 capital (wherever applicable)," RBI said. Also read: Bank of Baroda's margin pressure to continue before easing in FY26 second half The new directions will apply only to future investments. Investments and commitments made already will continue to be governed by current norms. Further, RBI, in consultation with the government, may exempt certain AIFs that have been set up for strategic purposes. The central bank has sought comments and feedback on the new draft norms by 8 June. 'The RBI's updated guidelines on bank investments in AIFs reflect a mature policy shift. They balance prudential risk management with the broader developmental objective of banks," said Gopal Srinivasan, chairman and managing director of TVS Capital Funds, adding the move will help restore regulatory clarity for such investments. Need for revised norms RBI said the draft was issued following the guidelines issued by the Securities and Exchange Board of India on 8 October, 2024 requiring specific due diligence with respect to investors and AIF investments. RBI said the new norms will help 'prevent facilitation of circumvention of regulatory frameworks" by ensuring uniform guidelines across regulators. Also read: SBI shares fall as lender tempers loan growth target amid tariff uncertainty The Sebi circular, while highlighting concerns of RBI-regulated lenders using AIFs to evergreen stressed loans, introduced stricter due diligence requirements for AIFs, their managers and key management personnel. The objective was to prevent circumvention of regulations, tighten oversight over such funds and prevent ineligible investors from accessing benefits meant for qualified institutional buyers (QIBs) and qualified buyers (QBs). AIFs were also required to perform due diligence if 25% or more of the scheme's corpus was contributed by RBI-regulated investors or if they exerted significant influence over investment decisions. 'Taking into account the more robust and comprehensive structure provided under the Sebi guidelines, there was a scope and need for bringing in some relaxations," said Jyoti Prakash Gadia, managing director at Resurgent India, a category-1 merchant bank. 'Since an approach of discipline has been exhibited by the regulated entities subsequent to the previous guidelines, the partial relaxations are expected to bring in better utilization of the alternate investment funds," he added. Background On 19 December, 2023, RBI asked lenders not to invest in AIFs that have direct or indirect downstream investments in companies that were borrowers in the last 12 months. Further, such existing investments were required to be liquidated or fully provided for in 30 days. This prompted several large private banks to make significant provisions against these investments in their financials for the last two quarters of FY24. In March 2024, the regulator clarified that these investments would exclude equity shares, compulsorily convertible preference shares and compulsorily convertible debentures. It had then also said that the provisioning will be required only to the extent of investment by the RE in the AIF scheme which is further invested by the AIF in the debtor company, and not on the entire investment of the RE in the AIF scheme. These guidelines were stipulated with the objective of preventing instances of evergreening by utilization of the AIF route to repay existing potential distressed loans. In Monday's circular, RBI said that the regulatory measures have brought 'financial discipline among the REs regarding their investment in AIFs". Siddarth Pai, co-founder and managing partner, 3one4 Capital said the new guidelines are significant to rupee capital formation as banks and NBFCs are important institutional investors in AIFs, but were placed under restrictions due to certain regulatory findings. Also read: Microfinance stress, RBI embargo weighed on Kotak Bank's Q4 profitability 'The Indian AIF industry is around ₹13.5 trillion in capital commitments as of 31 March, 2025. The aim is to reach at least ₹30 trillion by 2030. For this, the simplification of regulation and the removal of artificial regulatory barriers to investing in alternatives is key," he said. (With inputs by Sneha Shah)
Yahoo
27-03-2025
- Business
- Yahoo
India's quick commerce sector made two-thirds of all 2024 e-grocery orders, report says
(Reuters) - India's quick commerce sector accounted for over two-thirds of all e-grocery orders last year, with its total market share growing about five times to $6-7 billion from 2022, a report by consultancy firm Bain and e-commerce giant Flipkart showed. The industry, which is dominated by the likes of Zomato-owned Blinkit, also accounted for a tenth of overall e-retail dollars spent in 2024, according to the report released on Wednesday. These platforms deliver groceries to electronics within minutes, and its market share is expected to grow over 40% annually till 2030, driven by expansion across new categories, geographies and consumer segments, according to the report. "The dramatic rise of quick commerce (i.e., delivery in less than 30 minutes) has been one of the most defining hallmarks of India's e-retail market over the last two years," according to the report, which stated that the sector had over 20 million annual online shoppers and employed over 400,000 people. However, these platforms could face some immediate challenges in expanding profitability, as they may struggle to grow into markets beyond large cities and also face stiff competition from larger e-commerce players including Flipkart. To sustain profitable growth, "companies must adapt their business models for markets beyond major metros, manage rising competition, and optimize supply chains", it said. The report comes at a time when players such as Flipkart Minutes, Myntra's M-now, BigBasket's BB Now, and Amazon's Tez have forayed into the sector with their respective quick commerce platforms. However, some industry experts expect this boom to be short lived. Last month, a Blume Ventures' report said that the sector may struggle to maintain its current pace of growth. TVS Capital Funds Chairman Gopal Srinivasan told Reuters in an interview that the quick-commerce frenzy is a "passing fad" and unsustainable in the long run. (This story has been corrected to say e-grocery, not e-retail, in the headline and paragraph 1) Sign in to access your portfolio
Reuters
27-03-2025
- Business
- Reuters
India's quick commerce sector made two-thirds of all 2024 e-retail orders, report says
March 27 (Reuters) - India's quick commerce sector accounted for over two-third of all e-retail orders last year, with its total market share growing about five times to $6-7 billion from 2022, a report by consultancy firm Bain and e-commerce giant Flipkart showed. The industry, which is dominated by the likes of Zomato-owned ( opens new tab Blinkit, also accounted for a tenth of overall e-retail dollars spent in 2024, according to the report released on Wednesday. These platforms deliver groceries to electronics within minutes, and its market share is expected to grow over 40% annually till 2030, driven by expansion across new categories, geographies and consumer segments, according to the report. "The dramatic rise of quick commerce (i.e., delivery in less than 30 minutes) has been one of the most defining hallmarks of India's e-retail market over the last two years," according to the report, which stated that the sector had over 20 million annual online shoppers and employed over 400,000 people. However, these platforms could face some immediate challenges in expanding profitability, as they may struggle to grow into markets beyond large cities and also face stiff competition from larger e-commerce players including Flipkart. To sustain profitable growth, "companies must adapt their business models for markets beyond major metros, manage rising competition, and optimize supply chains", it said. The report comes at a time when players such as Flipkart Minutes, Myntra's M-now, BigBasket's BB Now, and Amazon's Tez have forayed into the sector with their respective quick commerce platforms. However, some industry experts expect this boom to be short lived. Last month, a Blume Ventures' report said that the sector may struggle to maintain its current pace of growth. TVS Capital Funds Chairman Gopal Srinivasan told Reuters in an interview that the quick-commerce frenzy is a "passing fad" and unsustainable in the long run.
Yahoo
25-02-2025
- Business
- Yahoo
India's quick-commerce sector may struggle to maintain current growth, Blume Venture's report says
(Reuters) - India's booming quick-commerce sector may struggle to maintain its current pace of growth as expansion beyond major cities remains limited and competition from larger e-commerce players intensifies, according to a report by Blume Ventures. These companies deliver groceries to electronics within minutes and their market share has grown to $7.1 billion in fiscal year 2025 from just $300 million in 2022, the venture capital firm's Indus Valley 2025 report said. India's "fastest growing industry segment ever", dominated by the likes of Zomato-owned Blinkit, Zepto and Swiggy Instamart, logged a 24-fold increase in gross order value (GOV) in the same period, it said. However, the segment will soon see its monthly transacting user (MTU) growth tapering, much like the country's ride-share, food delivery and e-commerce sectors before, the report warned. Moreover, the quick-commerce firms face stiff competition from large e-commerce platforms such as Walmart's Flipkart, Amazon and Reliance, who are preparing to launch their own quick-commerce operations. "… while it is not guaranteed they will be able to counter quick-commerce players, the increased competition will have some impact on the industry profit pool," the report said. Additionally, the expanding sector will likely start to affect the local grocery ecosystem and attract regulatory measures to check its growth, the report said. Earlier this month, TVS Capital Funds Chairman Gopal Srinivasan in an interview to Reuters said that India's quick-commerce frenzy is a "passing fad" and unsustainable in the long run. Blume Ventures was one of the earliest backers of crisis-laden quick-commerce firm Dunzo, which is reportedly on the brink of shutdown after a spate of layoffs, founder exits and unpaid vendor dues. Sign in to access your portfolio
Reuters
25-02-2025
- Business
- Reuters
India's quick-commerce sector may struggle to maintain current growth, Blume Venture's report says
Feb 25 (Reuters) - India's booming quick-commerce sector may struggle to maintain its current pace of growth as expansion beyond major cities remains limited and competition from larger e-commerce players intensifies, according to a report by Blume Ventures. These companies deliver groceries to electronics within minutes and their market share has grown to $7.1 billion in fiscal year 2025 from just $300 million in 2022, the venture capital firm's Indus Valley 2025 report said. India's "fastest growing industry segment ever", dominated by the likes of Zomato ( opens new tab -owned Blinkit, Zepto and Swiggy ( opens new tab Instamart, logged a 24-fold increase in gross order value (GOV) in the same period, it said. However, the segment will soon see its monthly transacting user (MTU) growth tapering, much like the country's ride-share, food delivery and e-commerce sectors before, the report warned. Moreover, the quick-commerce firms face stiff competition from large e-commerce platforms such as Walmart's (WMT.N), opens new tab Flipkart, Amazon (AMZN.O), opens new tab and Reliance ( opens new tab, who are preparing to launch their own quick-commerce operations. "… while it is not guaranteed they will be able to counter quick-commerce players, the increased competition will have some impact on the industry profit pool," the report said. Additionally, the expanding sector will likely start to affect the local grocery ecosystem and attract regulatory measures to check its growth, the report said. Earlier this month, TVS Capital Funds Chairman Gopal Srinivasan in an interview to Reuters said that India's quick-commerce frenzy is a "passing fad" and unsustainable in the long run. Blume Ventures was one of the earliest backers of crisis-laden quick-commerce firm Dunzo, which is reportedly, opens new tab on the brink of shutdown after a spate of layoffs, founder exits and unpaid vendor dues.
