Insight
Balancing Relaxation and Risk: A Critical Analysis of Gaps in Reserve Bank of India (Investment in AIF) Directions, 2025
Partner, Varun Chauhan and Associate, Pranav Dwivedi have recently authored an article titled, ‘Balancing Relaxation and Risk: A Critical Analysis of Gaps in Reserve Bank of India (Investment in AIF) Directions, 2025’.
Alternative Investment Funds (AIFs) play a vital role in India’s financial ecosystem, but they have also raised regulatory concerns around ever-greening and indirect exposure to stressed borrowers. This article examines the evolution of the RBI’s regulatory framework governing Regulated Entities’ investments in AIFs, culminating in the RBI (Investment in AIF) Directions, 2025. While the Directions introduce meaningful relaxations, the article critically analyses the structural loopholes that may dilute their effectiveness and explores possible regulatory responses to ensure substance prevails over form.
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