RBI caps investments by banks, NBFCs in AIF schemes at 20%

The Reserve Bank of India (RBI) has issued new directions for regulated entities (REs) such as banks and non-banking financial companies (NBFCs) regarding investments in Alternative Investment Funds (AIFs).These directions cap the cumulative exposure of all REs in an AIF scheme at 20%, with a single RE’s contribution limited to 10% of the scheme’s corpus. Equity instruments have been excluded from the scope of downstream investments subject to provisioning requirements.