Stricter Due Diligence for AIFs: Compliance with Standards and Reporting Requirements for Significant Investments.

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....This circular specifies due diligence requirements for Alternative Investment Funds (AIFs) to prevent circumvention of regulatory frameworks. Key points include: AIFs designated as Qualified Institutional Buyers (QIBs) must conduct due diligence per Standard Setting Forum (SFA) standards when investor(s) contribute 50% or more to a scheme's corpus, before availing QIB benefits. Similar due diligence is required for AIFs as Qualified Buyers investing in security receipts issued by Asset Reconstruction Companies. For schemes with RBI-regulated investors/sponsors contributing 25% or more, due diligence must ensure indirect exposures comply with RBI norms. Schemes with 50% or more corpus from investors in countries sharing land borders with Ind.........