ALTERNATIVE INVESTMENT FUNDS

ALTERNATIVE INVESTMENT FUNDS

Subject : Economics

Context : Markets regulator Sebirationalised the reporting requirements for alternative investment funds in order to provide ease of compliance for such entities.

Concept :

AIFs

• As defined in Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, AIFs refer to any privately pooled investment fund, (whether from Indian or foreign sources), in the form of a trust or a company or a body corporate or a Limited Liability Partnership (LLP).
• AIF does not include funds covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities.
• Hence, in India, AIFs are private funds which are otherwise not coming under the jurisdiction of any regulatory agency in India.

Categories:

• As per SEBI (AIF) Regulations, 2012, AIFs shall seek registration in one of the three categories:
• Category I: Mainly invests in start- ups, SME’s or any other sector which Govt. considers economically and socially viable.
• Category II: These include Alternative Investment Funds such as private equity funds or debt funds for which no specific incentives or concessions are given by the government or any other Regulator
• Category III : Alternative Investment Funds such as hedge funds or funds which trade with a view to make short term returns or such other funds which are open ended and for which no specific incentives or concessions are given by the government or any other Regulator.