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Informist, Monday, May 19, 2025

 

--RBI releases revised draft directions on regulated cos' investment in AIFs 

--RBI seeks comments on revised draft directions on invest in AIFs by Jun 8 

--RBI moots capping co's contribution to AIF scheme at 10% of corpus 

--RBI moots collective cap of 15% for investment by all cos in AIF scheme 

--RBI moots no restriction on co's invest up to 5% of AIF scheme corpus

 

MUMBAI –  Reserve Bank of India has issued revised draft guidelines for investments by regulated entities in alternative investment funds, it said in a press release on Monday. The revision has been proposed in the aftermath of the central bank observing financial discipline among regulated entities and their investments in alternative investment funds. RBI had issued guidelines on alternative investment funds in December 2023 as they had certain concerns relating to possible evergreening through this route. 

 

According to the draft guidelines, the regulator has proposed that a single regulated entity's contribution to any alternative investment fund scheme would be capped at 10% of its corpus. Collectively, a ceiling of 15% will be applied for investment by all regulated entities in an alternative investment scheme.

 

It has also proposed that investments by a regulated entity of up to 5% of the corpus of an alternative investment scheme will be allowed without any restrictions. However, if the investment by any regulated entity exceeds 5%, and if the scheme has a downstream debt investment in a debtor company of the regulated entity, excluding equity shares, compulsorily convertible preference shares and compulsorily convertible debentures, then the regulated entity would be required to make 100% provisions to the extent of its proportionate exposure, the draft said.

 

The central bank may exempt certain alternative investment funds, in consultation with the government, that have been set up for strategic purposes, the draft said. The RBI has sought comments on the draft directions by Jun. 8.  End

 

Reported by Kshipra Petkar

Edited by Vandana Hingorani

 

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