Investment by Regulated Entities (REs) in Alternate Investment Funds (AIFs)
Revised Draft Directions by RBI
The Reserve Bank of India (RBI) released revised draft directions on May 18, 2025, regarding investments by Regulated Entities (REs) in Alternate Investment Funds (AIFs).
- Objective: The revised directions aim to improve financial discipline among REs investing in AIFs, in line with Securities & Exchange Board of India (SEBI) guidelines.
- Investment Cap:
- A single RE’s contribution to any AIF scheme will be capped at 10% of its corpus.
- A collective ceiling of 15% will apply for investment by all REs in an AIF scheme.
- Investments by a RE up to 5% of the corpus of an AIF scheme will be allowed without any restriction.
Investment Provisions
- Investments exceeding 5% of the corpus and involving downstream debt investment in a debtor company of the RE will require the RE to make 100% provisions to the extent of its proportionate exposure.
- Exemptions may be granted by RBI, in consultation with the government, for AIFs set up for strategic purposes.
Implementation and Feedback
- The revised directions will be applied prospectively.
- Existing investments or commitments will adhere to current norms.
- Public and stakeholder comments on the draft directions are invited until June 8.