RBI (Investment in AIF Directions), 2025
On July 29, 2025, RBI released "Investment in AIF Directions, 2025" —applicable to NBFCs and other Regulated Entities (REs). A closer legal look reveals a strong regulatory intent: curb indirect evergreening and tighten capital discipline. Key highlights: 1️⃣ 10% Cap per RE & 20% Collective Cap across all REs in an AIF scheme. 2️⃣ If an RE contributes >5% to an AIF that makes non-equity investments in RE’s own debtor company, RE must make 100% provision to the extent of its proportionate indirect exposure. 3️⃣ If an RE subscribes to subordinated units of an AIF, the investment must be entirely deducted from capital funds (Tier-1 & Tier-2). 🔍 Legal and compliance teams at NBFCs must now revisit: - Their AIF investment approval matrices; - Existing exposures vis-à-vis related-party/indirect lending; - Tier-1 capital impact under the revised approach. This is not just a compliance update — it’s a strategic recalibration of how structured exposure via AIFs is view...