India proposes rules to help alternate investment funds acquire bad loans

(Reuters) – India’s markets regulator on Tuesday proposed a framework which will help alternate investment funds (AIFs) in acquiring stressed assets, according to a consultation paper uploaded on the regulator’s website.

Securities and Exchange Board of India (SEBI) in the paper said that while new category of AIFs called special situation funds were introduced in 2021, the Reserve Bank of India (RBI) had to recognise this special category funds before they could acquire stressed loans.

The proposed rules drafted by SEBI and RBI, define what sort of assets these funds can acquire, the investors who can invest in these funds and how these funds will be monitored and supervised.

The regulator has sought comments from market participants till Dec 27.

(Reporting by Jayshree P Upadhyay; Editing by Marguerita Choy)