The Reserve Bank of India (RBI) has modified norms for regulated entities (REs) concerning their investments in Alternative Investment Funds (AIFs).

Banking & Finance

The Reserve Bank of India (RBI) has modified norms for regulated entities (REs) concerning their investments in Alternative Investment Funds (AIFs). The Provisions apply to banks and other financial institutions (called REs). Under the new rule, regulated entities (REs) must reserve funds only for the portion of their investment in the AIF scheme that is subsequently invested by the AIFs in a debtor’s company, not for the entire investment in the AIF scheme. The circular doesn’t apply to investments made by REs in AIFs through intermediaries like fund of funds or mutual funds.


      Alternative Investment Funds (AIFs) are private investment pools created in India.

      AIFs function in accordance with the SEBI (Alternative Investment Funds) Regulations of 2012.

      In December 2023, the RBI had stopped REs from investing in AIF units that had downstream investments in any debtor’s company of the REs.

 

     


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