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AIF investments UPSC NOTE

 Why in News

  • The RBI has tightened norms for Regulated Entities (RE) like banks andNon-Banking Financial Companies to prevent evergreening of loans via investments in Alternative Investment Funds (AIFs).

  • The regulator said though REs do make investments in units of AIFs as part of their regular investment operations, certain transactions of REs involving AIFs had raised regulatory concerns.

What is AIF investments

  • AIF stands for Alternative Investment Fund. 

  • It's a type of privately pooled investment vehicle in India that collects funds from investors to invest in assets that go beyond traditional options like stocks and bonds.

  • AIFs are regulated by the SEBI but have more flexibility in their investment strategies compared to mutual funds.

  • They can invest in a wider range of assets, including:

    • Private equity, Venture capital, Hedge funds, Real estate, Debt

There are three main categories of

  • Category I: Invests in socially and economically viable sectors like infrastructure, SMEs, and agriculture. Usually targets institutions and high-net-worth individuals (HNIs).

  • Category II: Includes private equity funds, debt funds, and hedge funds. Open to a wider range of investors, including qualified institutional buyers (QIBs).

  • Category III: Includes hedge funds, funds employing short-term strategies, and open-ended funds. Targets sophisticated investors with high-risk tolerance.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: AIF investments UPSC NOTE
AIF investments UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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