New Delhi, May 20 -- Banks, non-bank lenders and financial institutions may get to invest up to 10% in the corpus of alternate investment fund (AIF) schemes, in a relief for the sector that faced a central bank clampdown in December, 2023.

There will be no restriction on regulated entities (REs) such as banks for investing up to 5% in the AIF scheme's corpus, Reserve Bank of India (RBI) proposed on Monday. However, if the AIF scheme invests in a company that has borrowed from the bank, then the RE must make full provision to the extent of its proportionate exposure, the draft circular said. Again, total investments by all REs in any AIF scheme will be capped at 15% of the scheme corpus.

"Notwithstanding, if the RE's contribution is in t...