NISM Series XIX-B · Chapter 2: Growth of Alternative Investment Funds in India and Suitability of Category III AIFs

L1 · Foundation

Foundation — How hedge funds reached India

The birth of the hedge fund in 1949 and how the term was originally understood; why no hedge fund was domiciled in India before 2012 and the three legal obstacles that kept them out; the limited routes available to Indian residents, mutual funds and listed companies, including the Liberalised Remittance Scheme and its two limits; the six IOSCO characteristics used to identify a hedge fund; the three additional conditions SEBI imposed for FII registration in 2004; and the arrival of the AIF Regulations on 21 May 2012 with the consolidation and transformation that followed.

20 min read · Worth 4% of the paper · Written from pages 27–43 of the official NISM workbook · Updated 17 September 2026

From 1949 to the AIF Regulations

1. The birth of the hedge fund

⚠️ "Over time, hedge funds began to DIVERSIFY THEIR INVESTMENT PORTFOLIOS TO INCLUDE OTHER FINANCIAL INSTRUMENTS such as FIXED INCOME SECURITIES, CONVERTIBLE SECURITIES, CURRENCIES, EXCHANGE TRADED FUTURES CONTRACTS, COMMODITY FUTURES AND COMMODITY OPTIONS".

Note the three ingredients in the original description — incentive fees, short selling and leverage. All three survive into the modern Category III AIF: performance-based fees, the ability to go long and short, and leverage at fund level.

2. India before 2012

⚠️ "Indian capital markets witnessed SIGNIFICANT GROWTH IN THE 1990s. With the notification of rules and regulations governing PORTFOLIO MANAGERS AND SEBI (MUTUAL FUNDS) REGULATIONS, the asset management business TOOK SHAPE IN THE PRIVATE SECTOR IN INDIA".

⚠️ "FOREIGN INVESTORS WERE INVESTING SIGNIFICANT FUNDS THROUGH HEDGE FUNDS AND FUNDS-OF-FUNDS, SET UP IN OFFSHORE JURISDICTIONS. Such funds invested DIRECTLY IN INDIAN SECURITIES MARKET, OR THROUGH OFFSHORE DERIVATIVE INSTRUMENTS (ODIs), ISSUED BY FOREIGN INSTITUTIONAL INVESTORS (FIIs) AGAINST UNDERLYING INDIAN SECURITIES".

2.1 The Eurekahedge index

⚠️ "EUREKAHEDGE INDIA LONG SHORT EQUITIES HEDGE FUND INDEX is AN EQUALLY WEIGHTED INDEX OF 15 CONSTITUENT FUNDS. The index was designed to provide A BROAD MEASURE OF THE PERFORMANCE OF UNDERLYING HEDGE FUND MANAGERS WHO INVEST EXCLUSIVELY IN INDIA. The index is BASE WEIGHTED AT 100, AS ON DECEMBER 1999".

⚠️ "The India-focused hedge funds have SHOWN CONSISTENT RETURNS, EVEN AFTER A DECREASE IN THE INDEX VALUE DURING THE GLOBAL FINANCIAL CRISIS OF 2008".

2.2 The three obstacles

#	⚠️ Obstacle
1	⚠️ "ANY OFFERING OF SHARES TO AT LEAST 50 PERSONS WOULD CONSTITUTE A PUBLIC OFFERING, and the fund would be REQUIRED TO ISSUE AND REGISTER A PROSPECTUS"
2	⚠️ "As per RBI CIRCULAR NO. 80 DATED MARCH 18 2004, ANY INDIAN BANK APPOINTED BY OFFSHORE FUNDS TO MARKET THEIR PRODUCTS IN INDIAN MARKETS HAD TO SEEK PRIOR APPROVAL FROM RBI FOR ACTING AS AN AGENT of such overseas funds"
3	⚠️ "SOME HEDGE FUNDS WERE NOT BEING REGULATED BY THE RESPECTIVE SECURITIES REGULATOR(S) IN THEIR COUNTRY OF INCORPORATION, due to which THEY WERE PROHIBITED TO ENTER THE INDIAN SECURITIES MARKET AS AN FII. However, Hedge Funds COULD INVEST THROUGH A 'SUB-ACCOUNT', IF SPONSORED BY A REGISTERED FII AND MEETING THE REQUIREMENTS OF 'FIT AND PROPER' PERSONS"

⚠️ "Furthermore, ON ACCOUNT OF THE ABSENCE OF FULL CAPITAL ACCOUNT CONVERTIBILITY, THE GENERAL PRINCIPLES OF CORPORATE LAW AND EXCHANGE CONTROL LAWS WERE APPLICABLE. As a result, INDIAN RESIDENTS WERE NOT PERMITTED TO INVEST IN FOREIGN SECURITIES, EXCEPT IN ACCORDANCE WITH THE REGULATIONS FRAMED UNDER THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999, OR AS PRESCRIBED BY THE RESERVE BANK OF INDIA".

3. The three limited routes

3.1 Indian resident individuals

⚠️ "Alternatively, Indian resident individuals were permitted to ACQUIRE FOREIGN SECURITIES IF THE CONSIDERATION WAS PAID OUT OF A RESIDENT FOREIGN CURRENCY (RFC) ACCOUNT".

Compare the two numbers and the problem is obvious. Until 2015 the LRS allowed USD 25,000 a year while a typical hedge fund required a USD 100,000 minimum ticket — four years of an investor's entire remittance allowance for a single subscription.

3.2 Indian mutual funds

⚠️ "INDIAN MUTUAL FUNDS COULD INVEST ONLY UP TO 10 PERCENT OF ITS NET ASSETS IN FOREIGN SECURITIES. Hence, A LIMITED NUMBER OF QUALIFIED MUTUAL FUNDS WERE ALLOWED TO INVEST IN OVERSEAS EXCHANGE TRADED FUNDS".

3.3 Indian listed companies

⚠️ "INDIAN LISTED COMPANIES WERE PERMITTED TO INVEST IN FOREIGN COMPANIES LISTED ON A RECOGNISED STOCK EXCHANGE".

4. The IOSCO characteristics

#	⚠️ Characteristic
i	⚠️ "NON-APPLICABILITY OF BORROWING AND LEVERAGE RESTRICTIONS"
ii	⚠️ "SIGNIFICANT PERFORMANCE FEES ARE PAID TO THE INVESTMENT MANAGER, IN ADDITION TO AN ANNUAL MANAGEMENT FEES"
iii	⚠️ "INVESTORS ARE TYPICALLY PERMITTED TO REDEEM THEIR INTERESTS PERIODICALLY — i.e. QUARTERLY, SEMI-ANNUALLY OR ANNUALLY"
iv	⚠️ "INVESTMENT OF SIGNIFICANT 'OWN' FUNDS BY THE INVESTMENT MANAGER"
v	⚠️ "USE OF DERIVATIVES, OFTEN FOR SPECULATIVE PURPOSES, WITH THE ABILITY TO SHORT SELL SECURITIES"
vi	⚠️ "MORE DIVERSE RISKS OR COMPLEX UNDERLYING PRODUCTS ARE INVOLVED"

Note the phrasing — "at least exhibit SOME of the following". IOSCO offered a family resemblance test rather than a definition, because hedge funds were too varied for any single rule to catch.

Characteristic (iv) is worth pausing on: the manager putting in significant funds of his own is a defining feature, not a courtesy. It aligns the manager with investors in a way a pure fee arrangement cannot.

5. FII registration for hedge funds — the 2004 window

⚠️ "In 2004, SEBI WAS PROVIDING A LIMITED WINDOW TO HEDGE FUNDS TO SEEK REGISTRATION WITHIN THE EXISTING FRAMEWORK OF THE SEBI (FOREIGN INSTITUTIONAL INVESTORS) REGULATIONS AS AN FII, WITH THE FOLLOWING ADDITIONAL PROVISIONS TO CONTROL AND MONITOR THE INHERENT RISKS WITHIN HEDGE FUNDS:"

Each condition attacks a different risk. (i) ensures somebody regulates the adviser. (ii) requires institutional money — sophisticated investors who will themselves scrutinise the fund. (iii) demands relevant experience, not merely long experience.

6. The turning point — 21 May 2012

⚠️ "THE PERIOD BETWEEN 2012 AND 2019 CAN BE TERMED AS THE CONSOLIDATION AND TRANSFORMATION PHASE for the Category III AIF industry in India".

6.1 What changed between 2012 and 2019

⚠️ "The AIF industry CAUGHT THE FANCY OF THE ULTRA-RICH BILLIONAIRES OF INDIA. Several new fund houses and investment managers SET UP OR LAUNCHED NEW CATEGORY III AIFs to cater to the wealthy Indian investor community".
⚠️ "As per NOTIFICATION NO. FEMA 355/2015-RB DATED NOVEMBER 16, 2015, the RBI LIBERALISED THE INVESTMENT RESTRICTIONS ON PERSONS RESIDENT OUTSIDE INDIA, INCLUDING REGISTERED FOREIGN PORTFOLIO INVESTORS (RFPI) OR NON-RESIDENT INDIANS (NRIs), TO INVEST IN AIFs".
⚠️ "INVESTMENTS MADE BY AIFs IN INDIA ARE CONSIDERED AS FOREIGN INVESTMENT IF NEITHER THE SPONSOR NOR THE MANAGER IS INDIAN 'OWNED AND CONTROLLED'. A CATEGORY III AIF WITH FOREIGN INVESTMENT SHALL MAKE PORTFOLIO INVESTMENT IN SUCH SECURITIES AND INSTRUMENTS IN WHICH RFPIs ARE ALLOWED TO INVEST".
⚠️ "Important recommendations were made by the SEBI ALTERNATIVE INVESTMENT POLICY ADVISORY COMMITTEE (AIPAC), HEADED BY SHRI NARAYAN MURTHY, in order to IMPROVE THE TAX REGIME for Category III AIFs and BOOST THE INFLOW OF CAPITAL FROM DOMESTIC INSTITUTIONAL INVESTORS such as BANKS, INSURANCE COMPANIES, PENSION FUNDS, CHARITABLE ORGANIZATIONS, FAMILY OFFICES AND HNIs".
⚠️ "RATIONALIZATION OF BASE EXPENSE RATIO (BER) charged by equity-oriented Mutual Fund schemes have ENCOURAGED MUTUAL FUND MANAGERS TO LAUNCH CATEGORY III AIFs IN INDIA and make investments WITH GREATER FLEXIBILITY".

⚠️ "All Category III AIFs registered with SEBI are MONITORED AS PER THE OPERATIONAL GUIDELINES AND RISK MANAGEMENT FRAMEWORK, INCLUDING THE PRUDENTIAL NORMS AND LEVERAGE LIMITS specified from time to time".
⚠️ "Investors are KEPT WELL-INFORMED ON PERIODIC INTERVALS with respect to TOTAL FUNDS RAISED, TOTAL INVESTMENT EXPOSURE, CONCENTRATION LIMITS AND LEVERAGE TAKEN".
⚠️ "The domestic Category III AIF market grew by identifying new opportunities such as TAKING EXPOSURES IN EXCHANGE-TRADED COMMODITY FUTURES AND COMMODITY OPTIONS CONTRACTS".
⚠️ "Category III AIFs making investments in LISTED MID-CAP AND SMALL-CAP SECURITIES and implementing HEDGING STRATEGIES through STOCK-BASED AND INDEX-BASED FUTURES AND OPTIONS have emerged. Some funds also focus on SPECIAL SITUATIONS such as MERGER ARBITRAGE, BUYBACKS, DE-LISTINGS, OPEN OFFERS, RIGHTS OFFERS AND CONVERTIBLE ARBITRAGE".

6.2 2018–2024 and beyond

⚠️ "MODERN ERA AND GLOBAL INTEGRATION (2024–2026) — THE RISE OF GIFT CITY (IFSC): The establishment of the INTERNATIONAL FINANCIAL SERVICES CENTRE PROVIDED A TAX-NEUTRAL 'OFFSHORE' JURISDICTION WITHIN INDIA. This allowed INDIAN FUND MANAGERS TO LAUNCH HEDGE FUNDS FOR GLOBAL INVESTORS WITH MINIMAL REGULATORY FRICTION AND EXEMPTIONS FROM CAPITAL GAINS ON SPECIFIC TRANSFERS".

⚠️ "There has been AN INCREASE IN MARKET DEPTH IN THE DERIVATIVES SEGMENT, WHICH LED TO A SURGE IN SYSTEMATIC AND QUANTITATIVE HEDGE FUNDS. Alongside these developments there has been CONTINUOUS REFORMATION IN REGULATORY STRUCTURES AND NAV REPORTING FOR CATEGORY III AIFs".

Think of it like this

The shop that could not open because no licence existed

A trader wanting to open a business finds not that his application was rejected, but that no application form exists. There is no rule against what he wants to do — there is simply no category for it.

⚠️ That was the position of hedge funds in India before 2012: "NO HEDGE FUNDS WERE DOMICILED IN INDIA. OFFSHORE HEDGE FUNDS WERE NOT ABLE TO OFFER THEIR PRODUCTS TO INDIAN INVESTORS WITHIN INDIA, AS THERE WAS NO REGULATORY REGIME FOR HEDGE FUNDS TO BE SET UP OR MARKETED IN INDIA."

The three obstacles that filled the vacuum:

⚠️ "ANY OFFERING OF SHARES TO AT LEAST 50 PERSONS WOULD CONSTITUTE A PUBLIC OFFERING", requiring a registered prospectus
⚠️ **Under RBI Circular No. 80 dated 18 March 2004, an Indian bank marketing an offshore fund needed prior RBI approval to act as agent
⚠️ **Funds "NOT BEING REGULATED BY THE RESPECTIVE SECURITIES REGULATOR(S) IN THEIR COUNTRY OF INCORPORATION" were barred from entering as an FII — though they could come in through a sub-account sponsored by a registered FII, meeting fit and proper requirements

The remedy, when it came, was not to relax any of these. It was to create the missing category: the AIF Regulations of 21 May 2012, which "IDENTIFIED HEDGE FUNDS UNDER CATEGORY III AIF."

The four-year saving for a single ticket

A family allowed to send Rs 2 lakh abroad each year, facing a school that demands Rs 8 lakh upfront, is not banned from the school. It simply cannot get there from here.

⚠️ That was the arithmetic facing Indian investors before 2015. The Liberalised Remittance Scheme of 4 February 2004 permitted "INDIAN RESIDENT INDIVIDUALS TO INVEST UP TO USD 25,000 PER YEAR FOR ANY PURPOSE INCLUDING INVESTMENT IN FOREIGN SECURITIES."

Four full years of an investor's entire annual remittance allowance — for one subscription. The limit rose to USD 250,000 per individual per financial year in June 2015, but by then the domestic route was opening anyway.

The other two routes were narrower still. Indian mutual funds could invest "ONLY UP TO 10 PERCENT OF NET ASSETS IN FOREIGN SECURITIES", and listed companies only "IN FOREIGN COMPANIES LISTED ON A RECOGNISED STOCK EXCHANGE."

The cook who eats his own food

A caterer who feeds his own family from the same kitchen is trusted differently from one who does not. Nothing in the contract changes — but the incentive does.

⚠️ IOSCO listed exactly this among the characteristics identifying a hedge fund: "INVESTMENT OF SIGNIFICANT 'OWN' FUNDS BY THE INVESTMENT MANAGER."

It sits alongside five others: "NON-APPLICABILITY OF BORROWING AND LEVERAGE RESTRICTIONS" · "SIGNIFICANT PERFORMANCE FEES... IN ADDITION TO AN ANNUAL MANAGEMENT FEES" · "INVESTORS ARE TYPICALLY PERMITTED TO REDEEM THEIR INTERESTS PERIODICALLY — QUARTERLY, SEMI-ANNUALLY OR ANNUALLY" · "USE OF DERIVATIVES, OFTEN FOR SPECULATIVE PURPOSES, WITH THE ABILITY TO SHORT SELL" · "MORE DIVERSE RISKS OR COMPLEX UNDERLYING PRODUCTS."

Note the careful wording of the test: funds "would need to AT LEAST EXHIBIT SOME OF THE FOLLOWING CHARACTERISTICS." IOSCO offered a family resemblance, not a definition — because hedge funds were already too varied for any single rule to capture.

The salary and the bonus

An employee on a fixed salary is paid the same whether the year was good or bad. One paid a salary plus a bonus on profits above a threshold has an entirely different relationship with the outcome.

⚠️ That is the fee difference which pulled mutual fund managers into the AIF space. "Managers of AIFs ARE FLEXIBLE TO CHARGE PERFORMANCE-BASED FEES ON THE 'ADDITIONAL RETURN' EARNED BY THE FUND ABOVE THE 'REFERENCE HURDLE RATE'. This fee is paid IN ADDITION TO THE MANAGEMENT FEES charged at a fixed rate on a yearly basis."

Combined with the "RATIONALIZATION OF BASE EXPENSE RATIO (BER)" for equity mutual fund schemes, the effect was predictable: managers who could earn more, and invest "WITH GREATER FLEXIBILITY", moved to where both were possible.

And the arrangement traces straight back to 1949, when a hedge fund was described as any fund using "INCENTIVE FEES, SHORT SELLING, AND LEVERAGE."

Three shelves in one shop

A shop may stock essentials at subsidised rates on one shelf, ordinary goods at market price on another, and imported luxuries on a third. The shelf a product sits on determines the tax, the display rules and who is expected to buy it.

⚠️ The AIF categories work the same way, and the sorting principle is stated plainly: "AIFs THAT ARE ECONOMICALLY IMPORTANT OR SOCIALLY IMPACTFUL MAY ENJOY GREATER BENEFITS, UNDER CATEGORY I AIFs."

Shelf	⚠️ What sits there
⚠️ Category I	Angel, Venture Capital, SME, Infrastructure, Special Situations and Social Impact Funds — sectors "which the government or regulators consider as SOCIALLY OR ECONOMICALLY DESIRABLE"
⚠️ Category II	Private Equity, Debt and Pre-IPO Funds — those "for which NO SPECIFIC INCENTIVES OR CONCESSIONS ARE GIVEN", and which do not leverage beyond day-to-day needs
⚠️ Category III	Hedge Funds and others employing "DIVERSE OR COMPLEX TRADING STRATEGIES" that "MAY EMPLOY LEVERAGE, INCLUDING THROUGH INVESTMENT IN LISTED OR UNLISTED DERIVATIVES"

Category II is defined negatively — it is what falls in neither of the others. That is worth remembering, because exam questions often describe a fund and ask which category it belongs to; if it is neither favoured nor leveraged, it is Category II by default.

The excellent car that will not fit the garage

A buyer with a small garage may be shown a superb vehicle by a reputable dealer at a fair price — and still cannot buy it. Nothing is wrong with the car. It does not fit.

⚠️ The workbook builds exactly this example. An HNI with a one-year horizon is offered a closed-ended Category III AIF in small and mid-cap securities. Even if the fund "is GENERATING ABOVE-AVERAGE RETURNS AND HAS APPOINTED AN EXPERIENCED MANAGER, THE INVESTMENT IN THIS FUND WILL NOT BE FEASIBLE FOR THE HNI INVESTOR GIVEN THE LIQUIDITY CONSTRAINTS."

Which is why the PPM sections matter so much before subscribing — particularly "REDEMPTION", which states "the period during which investors can redeem their money back from the Fund... the LOCK-IN PERIOD and the REDEMPTION FEES OR EXIT LOAD." Return and manager quality are the wrong questions if the horizon does not match.

Key terms in this chapter

AIPAC: The SEBI Alternative Investment Policy Advisory Committee, headed by Shri Narayan Murthy, which recommended improvements to the tax regime for Category III AIFs and measures to attract domestic institutional capital.
Alfred Winslow Jones: Founder of A.W. Jones & Co., which launched the first hedge fund in 1949 — described then as any investment fund using incentive fees, short selling and leverage to maximise returns.
Alpha: The excess return generated by a Category III AIF compared with the return of the benchmark index — the objective for which such funds deploy complex strategies aimed at short-term gains.
Angel Fund: A sub-category of Category I AIF raising funds from accredited investors. It must on-board at least five before first close, faces no minimum on an investor's own contribution, and must invest between Rs 10 lakh and Rs 25 crore in any investee company.
Angel investor: An accredited investor, or key management personnel of an angel fund or its manager, who invests in an angel fund. Contributions may not be accepted from those who are related parties of the investee company.
Category I AIF: An AIF investing in start-ups, early stage ventures, social ventures, SMEs, infrastructure or sectors the government or regulators consider socially or economically desirable — including venture capital, SME, social impact, angel, infrastructure, special situation and corporate debt market development funds.
Category II AIF: Defined negatively as an AIF falling in neither Category I nor Category III, and not undertaking leverage or borrowing beyond day-to-day operational requirements. Private equity, debt and pre-IPO funds sit here.
Category III AIF: An AIF employing diverse or complex trading strategies which may employ leverage including through listed or unlisted derivatives — hedge funds, short-term trading funds and open-ended funds receiving no special incentives.
Closed-ended Category III tenure: A minimum tenure of three years, generally with an additional mandatory lock-in of two years; units may be redeemed after two years on payment of the applicable exit load.
Corporate Debt Market Development Fund: A close-ended AIF formed as a trust with a fifteen-year tenure, its units held by AMCs and specified debt-oriented mutual fund schemes, existing to buy listed investment-grade corporate debt of up to five years residual maturity during market dislocation.
Debt Fund: An AIF investing primarily in debt securities of listed or unlisted investee companies or in securitised debt instruments. Private debt counts as alternative because of its illiquidity and because traditional investors do not commonly hold it.
Direct and indirect exposure: The principle that a concentration limit must count both assets held directly and those held through a fund. Because Category III AIFs themselves invest in listed equities, allocating to one can quietly increase exposure the investor already has.
Equity linked instruments: Instruments convertible into equity shares or share warrants, preference shares, and debentures compulsorily or optionally convertible into equity.
GIFT City: Gujarat International Financial Tec-City, announced in 2015 as India's first International Financial Services Centre, providing a tax-neutral offshore jurisdiction within India and regulated for AIFs by the SEBI (IFSC) Guidelines, 2015.
Infrastructure Fund: An AIF investing primarily in unlisted securities, partnership interest, listed debt or securitised debt of companies or SPVs engaged in operating, developing or holding infrastructure projects. Its key investors are sovereign wealth funds, multilateral funds and thematic AIFs.
IOSCO hedge fund characteristics: Six markers used to identify a hedge fund — no borrowing or leverage restrictions, significant performance fees alongside management fees, periodic redemption, significant own funds invested by the manager, use of derivatives with short selling, and diverse or complex products. A fund need exhibit only some of them.
Liberalised Remittance Scheme: Introduced by RBI on 4 February 2004 permitting Indian resident individuals to remit up to USD 25,000 a year for any purpose including foreign securities, raised to USD 250,000 per individual per financial year in June 2015.
Migrated VCF: A fund formerly registered under the SEBI (Venture Capital Funds) Regulations 1996 and since registered as a sub-category of VCF under Category I. It may not launch new schemes; migration closed on 19 July 2025 and expired-liquidation schemes have till 19 July 2026.
Offshore Derivative Instrument: An instrument issued by a Foreign Institutional Investor against underlying Indian securities, through which offshore hedge funds and funds-of-funds gained Indian exposure before a domestic regime existed.
Private Equity Fund: An AIF investing primarily in equity or equity linked instruments or partnership interests of investee companies — typically later-stage businesses with an established model needing to be scaled up.
Private Placement Memorandum: The fund document an investor should read before subscribing — particularly the Investment Objective and Strategy, Term of the Fund, Manager, and Redemption sections covering lock-in and exit load.
SME Fund: An AIF investing primarily in unlisted securities of SMEs, or securities of SMEs listed or proposed to be listed on an SME exchange or segment, SME carrying its meaning from the MSMED Act 2006.
Social Impact Fund: An AIF investing primarily in securities, units or partnership interests of social ventures or securities of social enterprises, satisfying social performance norms laid down by the fund and complying with the Social Stock Exchange framework and Annual Impact Report requirements.
Social venture: An entity formed to promote social welfare, solve social problems or provide social benefits — public charitable trusts registered with the Charity Commissioner, societies for charitable purposes or promotion of science, literature or fine arts, Section 8 companies, and micro-finance institutions.
Special Situations Fund: An AIF investing in special situation assets which may act as a resolution applicant under the IBC 2016 — holding stressed loans, ARC security receipts, and securities of companies in insolvency or in continuing default for ninety days with a D rating.
Specified AIF: A fourth category of AIF inserted by SEBI under the (AIF) (Second Amendment) Regulations 2023, effective 15 June 2023.
Venture Capital Fund: An AIF investing primarily in unlisted securities of start-ups, emerging or early-stage venture capital undertakings involved in new products, services, technology, IP-based activities or a new business model, and including migrated VCFs.
Venture capital undertaking: A domestic company not listed on a recognised stock exchange at the time of making the investment — so a later listing does not disqualify the holding, and a foreign company never qualifies.
Venture debt: Mezzanine financing of growth-stage venture capital undertakings — debt with an equity upside, such as warrants attached to the debt.

Check you have understood it

The L1 test for this chapter has 9 questions. Score 60% to unlock L2 Application (worked numericals and scenarios) and then L3 Exam-Ready (NISM-style traps, timed, with this paper's real marking). Tests, the higher levels and full mock exams need a free account so we can track your progress.

Create a free account

Original explanatory writing based on the official NISM workbook for Series XIX-B, which is published and copyrighted by NISM. Check figures against the current edition at nism.ac.in.

Something look wrong? Report it