SEBI Plans Lighter AIF Category for Accredited Investors
Why in the news
The capital markets regulator floated a fresh AIF category open only to accredited investors, with less stringent regulation than standard AIF schemes.
Key facts
- Regulator: SEBI.
- Proposal: separate AIF scheme category for accredited investors, under a lighter framework.
- An AIF pools private money from investors and invests per a set investment policy.
| Category | Investment focus | Examples |
|---|---|---|
| Category I | Socially or economically desirable sectors | Venture capital, SME funds, infrastructure |
| Category II | Diverse or complex strategies, no leverage | Private equity, debt funds |
| Category III | Diverse or complex trading strategies, with leverage | Hedge funds |
Basis of classification
- SEBI groups AIFs by investment strategy and risk profile.
Exam angle
- Hedge funds fall under Category III; venture capital under Category I.
- Leverage is used in Category III but not in Category II.
- New proposal targets: accredited investors.