AIFs in India are rejecting 'early exit' requests from banks and finance companies due to new rules. They are now considering how to handle these investors as they default on 'capital calls' from funds. AIFs may impose penalties on banks and NBFCs falling short of their original commitments. They may also cap investments, make exceptions for affected investors, and preserve relationships. The RBI's recent regulations conflict with the AIF regulatory regime, creating a need for urgent resolution. Investors and AIFs are exploring ways to avoid the regulatory restrictions.
