Key Points
Hurt by new rules, the alternative investment funds (AIFs) in India have turned down 'early exit' requests from banks and finance companies, and are now exploring ways to deal with these investors as they default on 'capital calls' from funds...
Will AIFs impose a penalty on banks and non-banking finance companies (NBFCs) which, following the Reserve Bank of India's recent dos and don'ts, fall short of their original commitments to the funds?.
Or, will funds simply cap the investment with contributions made so far, make an exception for banks and NBFCs caught in the new regulations, and move on to preserve relationships with these large investors?..
According to Tejesh Chitlangi, senior partner at the law firm, IC Universal Legal, "The Category I and II AIFs in which RBI's governed Regulated Entities (REs) primarily invest, are all closed-ended funds with investors not permitted preferential redemption rights in terms of SEBI AIF Regulations..
For instance, some investors (like NBFCs) have transferred the units issued by an AIF to group companies that are not regulated by RBI to sidestep the restrictions - with money and units being simply transferred from one group entity to another..
You might be interested in
Sebi wants to track money flowing into PE, VC funds
08, Jun, 23At a meeting with select industry persons and domain experts a fortnight ago, senior officials of the Securities and Exchange Board of India (Sebi) said new regulations are being explored to monitor the investments in AIFs, two persons aware of the deliberations told ET.
RBI bars banks, NBFCs from investing in AIFs of borrowers
20, Dec, 23In a move to curb “evergreening” of loans, the RBI on Tuesday barred banks and NBFCs from investing in any scheme of Alternative Investment Funds (A
AIFs may aid roll-over of stressed loans: Reserve Bank of India report
03, Jan, 24India Business News: NEW DELHI/MUMBAI: The RBI's recent regulatory actions on regulated entities investing in alternatives investment funds (AIFs) are meant to check everg.
'Adopt wait and watch strategy, deploy funds slowly on market dips, says Seemant Shukla of JM Financial Mutual Fund
30, Oct, 23Investors advised to explore staggered investment approach, equity flows are going towards mid-cap and small-cap categories, said Seemant Shukla of JM Financial Mutual Fund.
Sebi asks AIFs to provide “direct plan” option to investors; introduces trail model for distribution commission
11, Apr, 23In addition, the regulator came out with guidelines with respect to excluding an investor from an investment of AIF.
Get direct access to AIFs soon, and at a lower fee as well
20, Apr, 23India's Securities and Exchange Board has unveiled a series of reforms for the Alternative Investment Fund sector, which includes new disclosure norms and direct investor access. The reforms, which will come into effect on 1 May, aim to increase transparency, curb mis-selling and enable direct investor access without intermediaries. AIFs require a minimum investment amount of INR10m ($136,000) and are predominantly driven by the distribution model. The AIF sector grew at the fastest rate of 50% CAGR during 2017-2022, as per a Crisil report.
Sebi asks custodians of AIFs for investment info
05, Jul, 23The Securities & Exchange Board of India (Sebi) on Monday asked the custodians of these funds to state the names of investee companies, quantum of each investment, investible surplus on the day of the investment, and whether the investee company is an 'associate' of the fund, among other things.
HNIs want to invest in AIFs as debt funds lose long-term tax benefits
15, May, 23As the venture ecosystems shifts and evolves, AIFs stand to gain from changes.
FUND OF FUNDS: Where is your FoF investing?
09, Apr, 23To get LTCG benefit, 90% of FoF’s assets should be equity shares via ETFs.
Get lenders dressing up loans to cut exposure, AIFs tell RBI
25, Dec, 23These are among the key proposals made by the fund industry body in its representation to the Reserve Bank of India (RBI) in the wake of the central bank's sweeping measures, a person familiar with the subject told ET. The strict dos and don'ts imposed by RBI in a circular on December 19 are aimed at restraining lenders from using AIFs to move funds to help near-delinquent borrowers and hide the stress on loan books.