Sebi may allow AIFs to 'exclude' investors from certain investments

Proposal will help address concerns about evergreening of loans

The Securities and Exchange Board of India (Sebi) is planning to mandate the managers of alternative investment funds (AIFs) to exclude certain investors while making investments, in a bid to address concerns about the evergreening of loans at the fund level.
 

Sebi first codified the ‘excuse-exclude’ norms in April 2023, giving AIFs an option to exclude investors in certain circumstances. Through the fresh proposal, Sebi is seeking to convert this discretion into an obligation for AIFs, said legal experts. 
 

According to the proposal, an AIF manager will be required to carry out specific due diligence before each investment by the