AIF-II cheer as bank taps open

Lenders stopped investing in PEs & credit funds after last year's master risk circular by the apex bank

The Reserve Bank of India (RBI) has allowed banks to resume investing in AIF-II or Category-II Alternate Investment Funds (AIFs). It means that banks can again invest in equity and debt funds of private equity (PE) firms. This follows a master risk circular by the RBI on Monday which provides a cap on every type of investment banks can make. The 2016 risk circular had excluded the main category of AIF — AIF-II by not mentioning it. 
 

For the past one year, banks could not invest in private equity or credit funds, say managers at PE firms. ‘‘It is an