Centre seeks exemption for sovereign funds from RBI’s alternate investment fund rules

The government has asked the central bank to exempt sovereign funds from a recent set of tightened rules concerning investments in alternate investment funds (AIFs). This is in regard of rules proposed by the central bank in December 2023, under which it has asked banks and non-banking financial companies (NBFCs) to raise provisions for AIF investments – under which sovereign funds also fall – if they were also lenders to the projects in which the AIFs were investing. The government has also written to the RBI seeking special dispensation for sovereign-backed funds – including a fund called Special Window for Affordable and Mid-Income Housing (SWAMIH) set up to rescue stressed real estate projects.