Draft Rules on AIF Investments by Regulated Entities: RBI has released draft directions regarding investments by regulated entities (REs) in Alternative Investment Funds (AIFs). The key proposals include capping individual RE investment in any AIF scheme at 10% of the fund’s corpus, and a collective cap of 15% for all REs combined. Investments by an RE up to 5% will remain unrestricted. However, if an RE invests more than 5% in an AIF that has a downstream debt exposure (excluding equity instruments) to a debtor company of the RE, a 100% provision must be made for the RE’s proportional exposure. Additionally, investments in subordinated units under the Priority Distribution Model must be fully deducted from capital funds. The comments/ feedback from stakeholders are invited.
(Link: RBI Press Release Dated 19/05/2025, Draft Directions)