CAT-II vs CAT-III AIFs
| S. No. |
Criteria |
Category II AIF |
Category III AIF |
| 1 |
Investment Limit |
Accredited investors can invest up to 50% of investable funds in an investee company. |
Limit is 20% of investable funds in an investee company. |
| 2 |
Tenure |
Close-ended, minimum 3 years. |
Open-ended or close-ended. |
| 3 |
Investment Focus |
Primarily unlisted securities and/or listed debt rated ‘A’ or below. |
Listed/unlisted securities, derivatives, other AIFs, structured products, commodities, CDS. |
| 4 |
Leverage |
Not permitted. |
Permitted up to 2x NAV through derivatives/borrowing. |
| 5 |
Valuation |
Independent valuer once a year. |
NAV disclosure quarterly (close-ended) / monthly (open-ended). |
| 6 |
Reporting |
Annual report within 180 days of year end. |
Quarterly report within 60 days of quarter end. |
| 7 |
Continuing Interest |
>2.5% corpus or ₹5 cr (whichever lower). |
>5% corpus or ₹10 cr (whichever lower). |
| 8 |
Taxation |
Pass-through: investor bears tax liability. |
Fund itself bears tax liability. |
To understand how RBI’s Investment in AIF Directions, 2025 affect NBFC exposures and capital adequacy, read our
blog here
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