Brief Overview:
Keeping in mind indirect exposure of by regulated entities (REs) vis-à-vis stressed assets, a new framework has been issued for investments in AIFs by REs.
Technical Details:
Key Highlights
- Investment limits- 10% for individual RE contribution and 20% for collective contribution by RE in an AIF Scheme.
- Provisioning- 100% for downstream investments in debtor companies in which the RE has exposure (excluding equity) during the preceding 12 months.
- Exemption– Does not apply to previous investments.
Takeaways:
These directions are positioned to significantly impact REs by imposing stricter controls and greater transparency on their investments in AIFs. They aim to enhance financial stability by mitigating risks associated with AIF investments.
For further details, please see:
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12886&Mode=0
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