Market regulator Sebi weighs easing norms for Alternative Investment Funds

With the checks and balances now in place, we are in a position to consider greater product and innovation flexibility to AIFs, Ananth Narayan, a whole-time member of Sebi board said

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By Saikat Das 

India’s market regulator may relax some of the regulations governing the $53 billion alternative investment funds sector, after a series of measures aimed at curbing the industry’s erring ways seemed to have worked, a top official said.  

“With the checks and balances now in place, we are in a position to consider greater product and innovation flexibility to AIFs,” Ananth Narayan, a whole-time member of the Securities and Exchange Board of India board said at an event in Mumbai on Tuesday. He did not elaborate.

 

In October, Sebi had tightened due diligence norms for AIFs after it found that some of them were being used as vehicles to bypass regulations relating to investments by institutional players. Narayan said the regulator had “tried to address this in a targeted and constructive manner.”

 

He added the regulator had focused on AIF investments of around one trillion rupees which were circumventing rules and the tighter norms seemed to have had an impact. 

 

A year earlier, India’s central bank barred lenders from investing in AIFs amid concerns of a rise in unsecured loans and round-tripping of bad loans. Although it later eased some of those rules, SEBI in October had said some AIFs were helping lenders show stressed loans as regular assets through repeat lending.