In a significant regulatory development, the Reserve Bank of India (RBI) has released the Investment in Alternative Investment Funds (AIF) Directions, 2025, marking a structured and risk-conscious approach for Regulated Entities (REs) investing in AIF schemes. These directions aim to manage financial exposure, promote transparency, and protect capital adequacy, while still enabling institutional participation in India’s growing AIF ecosystem.
These Directions will come into effect from January 1, 2026, or an earlier date as determined internally by a Regulated Entity (RE) based on its own investment policy.
The directions are applicable to investments made by the following REs in units of AIFs:
Commercial Banks (including Small Finance Banks, Local Area Banks, and Regional Rural Banks)
Primary (Urban) Co-operative Banks, State and Central Co-operative Banks
All-India Financial Institutions
Non-Banking Financial Companies (NBFCs), including Housing Finance Companies
General Requirements
Every RE must ensure that its internal investment policy includes suitable provisions governing AIF investments. These policies must align with prevailing laws and the RBI’s regulatory framework, forming the foundation of compliant and risk-aware decision-making.