RBI Issues Relaxed AIF Guidelines
RBI may, in consultation with the government, exempt certain AIFs from the scope of the existing circulars and the revised Directions: RBI circular
MUMBAI: The Reserve Bank on Tuesday issued relaxed final norms for investment in Alternative Investment Fund (AIF) capping collective contribution by all lenders in a single AIF scheme to 20 per cent of the corpus of that AIF compared to 15 per cent in the draft norms.
The new norms cap contributions by a single regulated entity (RE), including banks and NBFCs, at 10 per cent of the corpus of an AIF scheme.
“The final guidelines are relaxed as these allow regulated entities to invest up to 20 per cent of the corpus of AIF as against 15 per cent allowed in draft guidelines. Further, in case of any common exposure between AIF and RE, the provisioning required on such investments is proportionate to the share of the RE’s investment in AIF corpus and not 100 per cent as required earlier,” said Anil Gupta, senior vice-president ICRA Ltd.
“If a lender contributes more than five per cent of the corpus of an AIF Scheme, which also has downstream investment in a debtor company of the RE, then the RE shall be required to make 100 per cent provision to the extent of its proportionate investment in the debtor company through the AIF Scheme, subject to a maximum of the direct loan and/ or investment exposure of the RE to the debtor company," it said.
The circular also said the RBI may, in consultation with the government, exempt certain AIFs from the scope of the existing circulars and the revised Directions.
The new framework called Reserve Bank of India (Investment in AIF) Directions, 2025 will take effect from January 1, 2026. Regulated entities (REs) can also choose to adopt the rules earlier, if their internal policy allows. The guidelines apply to commercial banks, co-operative banks, all-India financial institutions, and non-banking financial companies (NBFCs), including housing finance firms.