India's market regulator and its central bank share concerns over instances of alternate investment funds (AIFs) being used to mask bad loans in the financial system, a top official said on Wednesday.

The Securities and Exchange Board of India (SEBI) has seen "dozens of cases" of "egregious regulatory violations" by AIFs, such as to avoid recognition of non-performing assets, Ananth Narayan, a whole-time SEBI member, said at an event in Mumbai.

"(We) have shared our concern with the Reserve Bank of India (RBI), which agrees with our assessment," Narayan said.

Private credit funds fall under the broad category of AIFs for the purpose of regulations in India.

SEBI is investigating cases involving 150 billion to 200 billion rupees ($1.8 billion to $2.4 billion) where AIFs have been misused to circumvent rules, Reuters reported in October.

The market regulator intends to enforce a code of conduct to prevent this, said Narayan.

SEBI has asked that all liabilities and assets of these funds be held in dematerialised form, which will allow for greater transparency, he said. (Reporting by Jayshree P. Upadhyay; writing by Ira Dugal; Editing by Savio D'Souza)