The Securities and Exchange Board of India (SEBI), on October 08, 2024, issued a notification regarding the Specific due diligence of investors and investments of AIFs.
Circular to Alternative Investment Funds (AIFs), their managers, and key management personnel, mandating specific due diligence procedures. This initiative aims to prevent the circumvention of regulatory frameworks, particularly concerning benefits reserved for Qualified Institutional Buyers (QIBs) and Qualified Buyers (QBs). The circular outlines detailed criteria for conducting due diligence on investors and investments to ensure compliance with SEBI regulations and other financial sector laws (Business Standard).
Additionally, SEBI's circular addresses concerns about the potential "ever-greening" of stressed loans by lenders regulated by the Reserve Bank of India (RBI) through AIFs. To mitigate this, SEBI has specified due diligence requirements for schemes where investors from the same group contribute 50% or more to the corpus. These measures are designed to uphold the integrity of the financial system and ensure that AIFs do not facilitate practices that could undermine regulatory norms
[Notification No. SEBI/HO/AFD/AFD-POD-1/P/CIR/2024/135]
