Latest news with #AIFScheme
The Hindu
29-07-2025
- Business
- The Hindu
RBI caps investment by banks, NBFCs at 20% of corpus of AIF scheme
The Reserve Bank of India (RBI) has issued revised guidelines capping investment by Regulated Entities (REs) at 20% of the corpus of an Alternative Investment Fund (AIF) scheme. No RE can individually contribute more than 10% of the corpus of an AIF scheme, as per a circular issued by the RBI on Tuesday (July 29, 2025). 'Collective contribution by all REs in any AIF Scheme shall not be more than 20% of the corpus of that scheme,' it added. These Directions will come into force from January 1, 2026, or from any earlier date as decided by a RE as per its internal policy. As per the Directions if a RE contributes more than five per cent of the corpus of an AIF Scheme, which also has downstream investment (excluding equity instruments) in a debtor company of the RE, then the RE will be required to make 100% 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, the RBI said in the circular. If a RE's contribution is in the form of subordinated units, then it will need to deduct the entire investment from its capital funds— proportionately from both Tier-1 and Tier-2 capital (wherever applicable). The REs include Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks), Primary (Urban) Co-operative Banks/ State Co-operative Banks/ Central Co- operative Banks, All-India Financial Institutions and Non-Banking Financial Companies (including Housing Finance Companies). Commenting on this Sudhir Chandi, director at Resurgent India said, 'The new guidelines aim at better governing and strengthening the risk management process under the Investment Portfolio of the regulated entities. The previous guidelines issued in December 2023 and March 2024 have been repealed. ' 'The guidelines are now brought into alignment with SEBI guidelines on due diligence and investment to ensure uniformity and clarity,' he said. 'The guidelines directly seek to address the concern relating to the misuse of the AIF route for evergreening of the loans and advancing by using AIF to finance the existing stress loans portfolio,' he said adding 'By restricting the individual contribution to 10% of the corpus of an AIF, the concentration risk shall be mitigated.' Similarly, the restriction on the collective contribution of all REs will further spread the risk and entail wider participation of more regulated entities, he said. 'The provisioning norms have been further strengthened to 100 percent in specific cases to discourage the higher level of investment in the designated category of existing borrowers,' he said. The idea is to deter any diversion of funds from the alternative investment fund route for wrongful purposes contrary to the best practices of robust income recognition and assets classification, he stated.
Economic Times
29-07-2025
- Business
- Economic Times
RBI caps investment by a bank in AIF scheme at 10%
The Reserve Bank on Tuesday capped contributions by a single regulated entity (RE), including banks and NBFCs, at 10 per cent of the corpus of an Alternative Investment Fund (AIF) scheme. ADVERTISEMENT Also, collective contribution by all REs in any AIF Scheme should not be more than 20 per cent of the corpus of that scheme, said the Reserve Bank of India (Investment in AIF) Directions, 2025. REs refer to banks, NBFCs and All-India Financial Institutions. The RBI had issued guidelines in December 2023 and later in March 2024 prescribing the regulatory guidelines in respect of investment by the REs of the Reserve Bank in guidelines have been reviewed, inter alia, taking into account industry feedback as well as the regulations issued by the Securities and Exchange Board of India (Sebi) relating to specific due diligence of investors and investments of AIFs, the RBI said in a circular on Tuesday."No RE shall individually contribute more than 10 per cent of the corpus of an AIF Scheme," the circular said. ADVERTISEMENT Collective contribution by all REs in any AIF Scheme shall not be more than 20 per cent of the corpus of that scheme. "If a RE 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. PTI (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
29-07-2025
- Business
- Time of India
RBI caps investment by a bank in AIF scheme at 10%
The Reserve Bank on Tuesday capped contributions by a single regulated entity (RE), including banks and NBFCs, at 10 per cent of the corpus of an Alternative Investment Fund (AIF) scheme. Also, collective contribution by all REs in any AIF Scheme should not be more than 20 per cent of the corpus of that scheme, said the Reserve Bank of India (Investment in AIF) Directions, 2025. Explore courses from Top Institutes in Please select course: Select a Course Category Healthcare Data Science Finance PGDM MCA Data Science others CXO Cybersecurity Technology Degree Digital Marketing Public Policy Project Management healthcare Data Analytics Others Product Management Design Thinking MBA Operations Management Artificial Intelligence Leadership Management Skills you'll gain: Financial Analysis in Healthcare Financial Management & Investing Strategic Management in Healthcare Process Design & Analysis Duration: 12 Weeks Indian School of Business Certificate Program in Healthcare Management Starts on Jun 13, 2024 Get Details REs refer to banks, NBFCs and All-India Financial Institutions. The RBI had issued guidelines in December 2023 and later in March 2024 prescribing the regulatory guidelines in respect of investment by the REs of the Reserve Bank in AIFs. The guidelines have been reviewed, inter alia, taking into account industry feedback as well as the regulations issued by the Securities and Exchange Board of India (Sebi) relating to specific due diligence of investors and investments of AIFs, the RBI said in a circular on Tuesday. Live Events "No RE shall individually contribute more than 10 per cent of the corpus of an AIF Scheme," the circular said. Collective contribution by all REs in any AIF Scheme shall not be more than 20 per cent of the corpus of that scheme. "If a RE 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. PTI
Time of India
29-07-2025
- Business
- Time of India
AIF norms tightened: RBI caps bank, NBFC investment in AIF schemes at 10%; collective limit set at 20% of corpus
The Reserve Bank of India has capped investment by any single regulated entity—such as banks, NBFCs, or All-India Financial Institutions—at 10% of the corpus of any Alternative Investment Fund (AIF) scheme. The move is part of the central bank's updated Investment in AIF Directions, 2025, issued Tuesday. Additionally, total contributions by all regulated entities (REs) in a single AIF scheme must not exceed 20% of the scheme's corpus, according to the RBI circular, PTI reported. 'No RE shall individually contribute more than 10 per cent of the corpus of an AIF Scheme,' the circular said, while noting that collective exposure across entities is capped at 20%. The directions revise earlier circulars issued in December 2023 and March 2024. These changes, the RBI said, were made after reviewing feedback from stakeholders and incorporating recent SEBI regulations on investor due diligence and AIF investments. Further tightening risk controls, the RBI mandated 100% provisioning in specific cases: 'If a RE 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,' it said. However, this provisioning is capped at the RE's direct loan or investment exposure to the debtor company. The RBI also stated that, in consultation with the Centre, it may grant exemptions to certain AIFs from the scope of both the previous and revised circulars. Stay informed with the latest business news, updates on bank holidays and public holidays . Discover stories of India's leading eco-innovators at Ecopreneur Honours 2025
News18
29-07-2025
- Business
- News18
RBI caps investment by a bank in AIF scheme at 10 pc
Agency: Mumbai, Jul 29 (PTI) The Reserve Bank on Tuesday capped contributions by a single regulated entity (RE), including banks and NBFCs, at 10 per cent of the corpus of an Alternative Investment Fund (AIF) scheme. Also, collective contribution by all REs in any AIF Scheme should not be more than 20 per cent of the corpus of that scheme, said the Reserve Bank of India (Investment in AIF) Directions, 2025. REs refer to banks, NBFCs and All-India Financial Institutions. The RBI had issued guidelines in December 2023 and later in March 2024 prescribing the regulatory guidelines in respect of investment by the REs of the Reserve Bank in AIFs. The guidelines have been reviewed, inter alia, taking into account industry feedback as well as the regulations issued by the Securities and Exchange Board of India (Sebi) relating to specific due diligence of investors and investments of AIFs, the RBI said in a circular on Tuesday. 'No RE shall individually contribute more than 10 per cent of the corpus of an AIF Scheme," the circular said. Collective contribution by all REs in any AIF Scheme shall not be more than 20 per cent of the corpus of that scheme. 'If a RE 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. PTI NKD NKD MR (This story has not been edited by News18 staff and is published from a syndicated news agency feed - PTI) view comments First Published: July 29, 2025, 19:00 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
