Domestic Pool of Capital

1. RE (Regulated Entities) Investing in AIFs

• March 27, 2024: Investments in AIFs

• December 19, 2023: Investments in AIFs

Note: RBI has released a consultation paper proposing relaxation of restrictions on Regulated Entities (REs) investing in Alternative Investment Funds (AIFs). IVCA is actively gathering and consolidating industry feedback to provide a comprehensive response.

2. Overseas Investment Limit for AIFs

As of September 30, 2024, the USD 1,500 million overseas investment limit for Alternative Investment Funds (AIFs) represents only 1.03% of the industry's total size, a sharp decline from 11.95% in 2015. This stagnation in the cap has not kept pace with the industry's significant growth over the past decade.

As a result, AIF managers face increasing challenges, particularly as many promising Indian businesses are now incorporated or headquartered overseas, necessitating outbound investments. The current restriction not only limits access to global opportunities but also undermines the competitiveness of Indian AIFs, often compelling them to establish offshore structures to retain deals and investors.

Recognizing the critical importance of this issue, IVCA continues to actively engage with regulators to advocate for a revision of the overseas investment cap in alignment with the industry's evolving needs.

3. Regularization of Partly Paid Units (PPUs) of AIFs

This is to update you on IVCA's continuous engagement with the Reserve Bank of India (RBI) on the matter of regularization of partly paid units of AIFs (investment vehicles as per FEMA NDI Rules, 2019).

Over the past several months, IVCA has been in active dialogue with the RBI to seek clarity on late submission fee (LSF) and the compounding of PPU issuance and advocate for a reasonable and industry-aligned resolution.

• Communication to Members on Registration of Partly paid units

• May 23, 2025: AP DIR Circular NO 6 Dated May 23 2025

4. Exclusion of AIFs from BUDA & BULA Acts

• Definition of Deposits vs. Investments: BUDA does not clearly differentiate between regulated investment schemes (AIFs, PMS, Mutual Funds) and unregulated deposit schemes, leading to regulatory overlap.

• Regulated Schemes Already Governed by SEBI & IFSCA: AIFs and other investment vehicles operate under strict SEBI regulations, ensuring investor protection, transparency, and accountability.

• Risk of Dual Regulation: Classifying investments as deposits under BUDA creates compliance burdens and may deter domestic and foreign investors.