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NISM Series XIX-D study materials
NISM Series XIX-D study resources

NISM Series XIX-D: Alternative Investment Funds (Category I and II): regulatory framework and manager obligations

NISM Series XIX-D · Work through your exam, one topic at a time.

All guide sections

Alternative Investment Funds (Category I and II): regulatory framework and manager obligations

This domain tests the scheme-level rulebook for Category I and II AIFs - the SEBI (Alternative Investment Funds) Regulations, 2012 as amended - plus what a manager must do before and after a scheme goes live. Questions usually marry a definition to a number.

Where each fund sits

  • Category I: venture capital funds (angel funds are a sub-category), SME funds, social venture funds and infrastructure funds - capital for start-ups, early-stage businesses, SMEs, social ventures and infrastructure.
  • Category II: private equity funds and debt funds; no leverage beyond the temporary limit and not falling in Category I or III.

Numbers that decide the answer

  • Minimum corpus per scheme: Rs 20 crore; angel fund Rs 10 crore.
  • Minimum commitment: Rs 1 crore; Rs 25 lakh for employees/directors of the manager or sponsor, and for angel investors.
  • Maximum 1,000 investors per scheme, excluding employees/directors of the manager or sponsor.
  • Closed-ended; tenure at least 3 years; extension up to 2 years with consent of two-thirds of investors by value.
  • Sponsor/manager continuing interest: lower of 2.5% of corpus or Rs 5 crore, from own funds, locked in, not carved out of investors' commitments.
  • Single investee limit: 25% of corpus for Category I and II.
  • Borrowing only for temporary funding: up to 10% of investable funds, 30 days, four occasions a year.

Worked example

A Category II fund with a Rs 600 crore corpus. Continuing interest = lower of 2.5% (Rs 15 crore) and Rs 5 crore = Rs 5 crore. It proposes Rs 160 crore in one company: 26.7% of corpus, above the 25% cap, so the ceiling is Rs 150 crore. It also wants to borrow Rs 70 crore for 40 days: 10% of investable funds is Rs 60 crore and the duration exceeds 30 days, so the borrowing fails twice over.

Traps

Using 5%/Rs 10 crore continuing interest (that is Category III); counting manager employees within the 1,000-investor cap; assuming any investor may commit Rs 25 lakh; computing concentration on committed capital instead of corpus.