RBI Caps Lenders' AIF Exposure at 10% of Fund Corpus

The guidelines seek to address concerns relating to the misuse of the AIF route for evergreening of loans, say experts

- Shayan Ghosh

The Reserve Bank of India (RBI) on Tuesday capped investments by banks and non-bank financiers in alternative investment funds (AIFs) at 10% of the fund's corpus, two months after it proposed relaxations to its 2023 circular.

The central bank said no regulated entity should individually contribute more than 10% of the corpus of an AIF scheme and that the collective contribution of all such entities in any AIF should not cross 20% of the fund's corpus. The collective contribution limit is higher than the 15% figure proposed in May's draft circular. The RBI said these norms will apply to commercial banks, cooperative banks, all Indian financial institutions, NBFCs and housing finance companies from 1 January 2026 or earlier.