Sebi said Special Situation Funds (SSFs) that will invest only in stressed assets will be introduced and such funds will have a minimum corpus of Rs 100 crore. The decision, taken at the regulator’s board meeting, assumes significance against the backdrop of continuing efforts to address the issue of stressed assets in  the banking system.

SSFs will be introduced as a subcategory under Category I Alternative Investment Funds (AlFs).

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In a release after the board meeting, Sebi said SSFs will invest only in stressed assets such as stressed loans available for acquisition in terms of RBI norms or as part of a resolution plan approved  under the Insolvency and Bankruptcy Code.

These funds will also invest in security receipts issued by Asset Reconstruction Companies (ARCs), securities of companies in distress and any other asset/security as may be prescribed by the board from time to time. In this regard, AIF Regulations will be amended by Sebi.

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