New Delhi, Jan 27 (PTI) Capital markets regulator Sebi on Thursday said Special Situation Funds (SSFs) will invest only in stressed assets and have a minimum corpus of Rs 100 crore.

The new framework will come into force with immediate effect, the Securities and Exchange Board of India (Sebi) said in a circular.

Also Read | Union Budget 2022-23: Rise in Old-Age Pension, Re-Engaging Seniors Among Demands.

This comes after Sebi on Monday amended AIF (Alternative Investment Funds) rules for introducing SSF, a sub-category under Category I AIF, which will invest in 'special situation assets'.

The move assumes significance against the backdrop of continuing efforts to address the issue of stressed assets in the banking system.

Also Read | Vivo Y75 5G With Dimensity 700 SoC Launched in India at Rs 21,990.

In its circular, Sebi said each scheme of SSF will have a corpus of at least Rs 100 crore.

The minimum investment by an investor can be Rs 10 crore, whereas it can be Rs 5 crore in the case of an accredited investor.

Further, in case of investors who are employees or directors of the SSF, or employees or directors of the manager of the SSF, the minimum value of investment will be Rs 25 lakh.

Under the norms, 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 (IBC).

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.

According to Sebi, SSF intending to act as a resolution applicant under IBC will have to ensure compliance with the eligibility requirements.

Further, in respect of SSF acquiring stressed loan in terms of RBI norms, Sebi said the stressed loan acquired by it will be subject to a minimum lock-in period of six months.

The lock in period shall not be applicable in case of recovery of the stressed loan from the borrower.

(This is an unedited and auto-generated story from Syndicated News feed, LatestLY Staff may not have modified or edited the content body)