SEBI/HO/AFD/AFD - POD - 1/P/CIR/2024/112 — THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

CIRCULAR SEBI/HO/AFD/AFD - POD - 1/P/CIR/2024/112 August 19, 2024 To, All Alternative Investment Funds (AIFs) Sir/Madam, Sub: Guidelines for borrowing by Category I and Category II AIFs and maximum permissible limit for extension of tenure by LVFs Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 ("AIF Regulations " ) have been amended and notified on August 06, 2024 , with respect to (i) norms for borrowing by Category I and Category II AIFs , and (ii) maximum permissible limit for extension of tenure by Large Value Fund for Accredited Investors (LVFs) . Copy of the aforesaid notification is available at link . A. Guidelines for borrowing by Category I and Category II AIFs In terms of Regulation 16(1)(c) and Regulation 17(c) of AIF Regulations, Category I and Category II AIFs shall not borrow funds directly or indirectly or engage in any leverage for the purpose of making investments or otherwise, except for borrowing funds to meet temporary funding requirements and day-to-day operational requirements for not more than thirty days, on not more than four occasions in a year and not more than ten percent of the investable funds and subject to such conditions as may be specified by SEBI from time to time. In this regard, in order to facilitate ease of doing business and provide operational flexibility , it has been decided to allow Category I and Category II AIFs to borrow for the purpose of meeting temporary shortfall in amount called from investors for making investments in investee companies ('drawdown amount') . Category I and Category II AIFs may borrow for the purpose of meeting shortfall in drawdown amount, subject to the following additional conditions: 4.1. If AIF intends to borrow funds for meeting shortfall in drawdown amou