RBI Updates: AIFs now can be "qualified buyers" under SARFAESI Act

Reserve Bank of India (RBI) allowed Category II and Category III Alternative Investment Funds (AIFs) who are registered with SEBI to act as "Qualified Buyers" under SARFAESI Act.

By issuing a notification dated 05th July, 2018, RBI has allowed AIFs registered with SEBI to act as "Qualified buyers" under clause (u) of sub-section (1) of Section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. However, they should follow comply with following conditions:

1. The AIF which has invested in an asset reconstruction company (ARC) shall not invest in the security receipts issued by that ARC.

2. The AIF shall not invest in the security receipts issued on the underlying loans of any of its associate or group company.

3. The AIF shall not invest in the security receipts backed by non-performing assets of banks which hold equity of more than 10% in that AIF

Copy of such notification can be accessed below.