SEBI to introduce special circumstances fund for investment in stressed assets

The Securities and Exchange Board of India (SEBI) on Tuesday said that a special situation fund (SSF) will be put in place to invest in stressed assets. This fund will invest only in stressed assets. It will have a minimum capital of Rs 100 crore.

The decision was taken in the meeting of the Board of Directors of SEBI. The move comes amid ongoing efforts to address the issue of stressed assets in banks.

The Special Situation Fund will be offered as a sub-category under Alternative Investment Fund Category I.

SEBI said in a release that SAF will invest only in stressed assets. This includes a resolution plan for taking over bad loans under the Reserve Bank of India’s rules or approval under the Insolvency and Bankruptcy Code.

Such fund may invest in security receipts issued by Asset Reconstruction Company (ARC), securities of stressed companies and any other asset/security as the Board may from time to time determine.

SEBI will amend the Alternate Investment Fund Regulations in this regard.

As per the regulator, such funds will be exempted from the investment criterion in a company holding an alternative investment fund. Also, there will be no limit on investment in unlisted or listed securities of such companies.

Investors can invest minimum investment of Rs 10 crore and recognized investors can invest Rs 5 crore. The minimum corpus would be Rs 100 crore.

Further, SEBI Board of Directors has decided to amend the rules regarding revised net worth requirement for Trading Members (TM), Self-Clearing Members (SCM), Clearing Members (CMs) and Depository Participants (DPs), etc.