Overview

• The RBI capped any single lender's stake in an AIF scheme at 10% of its corpus and set a 20% limit on collective exposure by all regulated entities.
• Any lender with more than 5% of an AIF that invests in its own borrower must make full provisions for its proportional exposure to that debtor.
• Investments through subordinated AIF units must be fully deducted from both Tier-1 and Tier-2 capital.
• The directions replace the December 2023 and March 2024 circulars and authorize the RBI to exempt certain funds in consultation with the government.
• Banks and NBFCs are strengthening internal controls and compliance frameworks to prepare for the January implementation.