What changed
RBI circular DBOD.FID.FIC.No 9/01.02.00/2010-11 dated December 1, 2010, advised that the prudential guidelines on investment in venture capital funds (VCFs) issued to banks via circular DBOD No. BP.BC.27/21.01.002/2006-2007 dated August 23, 2006, shall apply mutatis mutandis to select All-India Financial Institutions (AIFIs). The AIFIs covered are Exim Bank, NABARD, NHB, and SIDBI.
What it means for you
AIFIs must now follow the same VCF investment norms as banks, including exposure limits, capital adequacy treatment, and risk management requirements. This harmonizes the regulatory framework across financial institutions and ensures consistent prudential oversight for venture capital exposures.
What you must do
- Review the original bank VCF guidelines (August 23, 2006 circular) and adopt them for your institution's VCF investments.
- Update internal policies and risk management frameworks to align with the extended norms.
- Ensure compliance with exposure limits and capital adequacy treatment as per the bank guidelines.
- Train relevant staff on the new requirements for VCF investment monitoring and reporting.
Who it affects
Exim Bank, NABARD, NHB, SIDBI, All-India Financial Institutions (AIFIs)
Which institutions are covered by this circular?
The circular applies to select All-India Financial Institutions: Exim Bank, NABARD, NHB, and SIDBI.
What guidelines are being extended?
The prudential guidelines on investment in venture capital funds (VCFs) originally issued to banks on August 23, 2006, are now applicable mutatis mutandis to the specified AIFIs.
When does this circular take effect?
The circular is dated December 1, 2010, and is effective immediately from that date.