RBI Caps AIF Investments by Banks, NBFCs at 10%

The Reserve Bank of India (RBI) on Tuesday capped investment by an individual-regulated entity at 10% of an alternative investment fund's (AIF) corpus and collective exposure at 20%.

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Also, if a bank or an NBFC invests over 5% in an AIF scheme, and that AIF also invests (not through equity) in a company the bank or the NBFC has lent to, the regulated entity must set aside the full value of its share in that company's exposure—limited to how much it has directly loaned or invested in the company, the RBI said.

"The final guidelines are relaxed as these allow regulated entities (REs) to invest up to 20% of the corpus of AIF as against 15% allowed in draft guidelines.