RBI Plans Softer Rules for AIF Investments: Single-Entity Cap Set, Strategic Exemptions Possible

 

The Reserve Bank of India (RBI) has issued proposals to ease investment norms for banks and Non-Banking Financial Companies (NBFCs) in Alternative Investment Funds (AIFs) following industry representations and improved financial discipline among the regulated entities. As per the draft guidelines, the investment by a single regulated entity in any scheme of an AIF would be capped at 10% of the fund corpus and 15% in aggregate for all such entities in a scheme. Investments up to 5% of a scheme's corpus can be made without any further restriction, but if an entity exceeds that and the AIF has downstream debt exposure to its borrowers, the exposure has to be fully provisioned.

 

The RBI may also exempt AIFs set up for strategic purposes, following consultation with the government. The central bank has sought stakeholder comments on the proposal until June 8, 2025.

 

Source: Economic Times, Business Standard, The Hindu Business Line