The Reserve Bank of India has issued the Reserve Bank of India (Investment in AIF) Directions, 2025, dated July 29, 2025. These directions come into force from January 1, 2026, or from an earlier date as decided by a regulated entity (RE) as per its internal policy.
These directions apply to investments by the following REs in units of AIF schemes:
- Commercial Banks (including Small Finance Banks, Local Area Banks, Regional Rural Banks)
- Primary (Urban) Co-operative Banks, State Co-operative Banks, Central Co-operative Banks
- All-India Financial Institutions
- Non-Banking Financial Companies (including Housing Finance Companies)
A RE’s investment policy shall include suitable provisions for investments in an AIF scheme, compliant with extant law and regulations.
No RE shall individually contribute more than 10 per cent of the corpus of an AIF scheme. Collective contribution by all REs shall not exceed 20 per cent of the corpus.
If a RE contributes more than 5 per cent in a scheme that has downstream investment (excluding equity instruments) in a debtor company of the RE, the RE shall make 100 per cent provision to the extent of its proportionate investment.
If the RE’s contribution is in the form of subordinated units, it shall deduct the entire investment from capital funds.
Outstanding investments or commitments made with prior RBI approval under the 2016 Master Direction are excluded from the scope of 6(a) and 6(b). RBI may, in consultation with the Government of India, exempt certain AIFs from the scope of these Directions (except paragraph 5).
Two earlier circulars dated December 19, 2023 and March 27, 2024 stand repealed. Existing commitments before the effective date may follow either the existing circulars or the revised directions in toto.
