The Securities and Exchange Board of India on 27th January 2022 has introduce Special Situation Funds (SSF), a sub-category under Category I AIF, which shall invest in ‘special situation assets.
Each scheme of SSF shall have a corpus of at least one hundred crore rupees and shall accept an investment of value not less than ten crore rupees from an investor. In case of an accredited investor, the SSF shall accept an investment of value not less than five crore rupees. 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 shall be twenty-five lakh rupees.
Further, in respect of SSF acquiring stressed loan in terms of Clause 58 of the Master Direction –Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 (‘RBI Master Direction’),the following is specified:
- SSF may acquire stressed loan upon inclusion of SSFin the respective Annex of the RBI Master Direction.
- The acquired Stressed loan shall 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
- SSF acquiring stressed loans in terms of the RBI Master Direction shall comply with the same initial and continuous due diligence requirements for its investors, as those mandated by Reserve Bank of India for investors in Asset Reconstruction Companies.
