RBI Caps RE Investment in AIFs at 10% Individually, 20% Collectively

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RBI AIF investment cap RBI Directions 2025 Regulated Entities AIF AIF investment limits 10% individual cap AIF

Notification No. RBI/DOR/2025-26/138 DOR.STR.REC.43/21.04.048/2025-26, Dated: 29.072025

RBI Issues New Directions for Investment in AIFs
The Reserve Bank of India (RBI) has issued the RBI (Investment in Alternative Investment Funds) Directions, 2025, aiming to regulate and streamline investments made by Regulated Entities (REs) in Alternative Investment Funds (AIFs). These Directions are part of RBI’s broader objective to mitigate concentration risks and ensure prudent exposure by REs in such investment vehicles.

Cap on Individual RE Contribution
Under the new framework, no Regulated Entity shall individually invest more than 10 per cent of the corpus of any AIF scheme. This cap is designed to prevent excessive exposure by a single regulated entity in an AIF, thereby protecting the financial system from potential systemic risks associated with concentrated investments.

Aggregate Investment Limit for All REs
In addition to the individual cap, the collective contribution by all regulated entities (such as banks, NBFCs, etc.) in any particular AIF scheme has also been restricted. As per the Directions, the combined investment by all REs in a single AIF scheme must not exceed 20 per cent of the total corpus of that scheme. This measure is expected to enhance diversification within AIF schemes and reduce dependency on institutional funding.

Effective Date and Implementation Flexibility
These Directions shall come into effect from January 1, 2026. However, RBI has provided flexibility to REs by allowing them to adopt these guidelines from an earlier date as per their internal policies. This allows REs to align their investment strategies in advance and ensure smooth transition to the new regulatory framework.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied