NISM Series X-A · Chapter 13: Overview of Alternative Investment Funds (AIFs)
वैकल्पिक निवेश फंड (AIF) का अवलोकन · NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination
~5 of 150 marks
90 MCQs + 9 case studies · 150 marks · 3 hours · 60% to pass · −25% of a question's marks per wrong answer
20 practice questions in our bank + 1 case study
What this chapter covers
Alternative investments and how AIFs evolved in India from venture capital, SEBI's AIF Regulations 2012 — investor and corpus limits, sponsor commitment, accredited investors, listing and investment conditions — the three AIF categories and fund types (VC, angel, PE, debt, infrastructure, SME, hedge, social impact, special situations).
वैकल्पिक निवेश फंड — SEBI नियम, श्रेणी I/II/III, न्यूनतम निवेश और फंड के प्रकार।
What to master before the exam
- An AIF is a privately pooled vehicle: each scheme needs a corpus of at least Rs 20 crore, at most 1,000 investors and private placement only.
- Minimum investment Rs 1 crore (Rs 25 lakh for employees or directors of the AIF or its manager); sponsor/manager continuing interest of 2.5% of the corpus or Rs 5 crore, whichever is lower (Category III: 5% or Rs 10 crore).
- Accredited individuals: income of at least Rs 2 crore, or net worth of at least Rs 7.5 crore (Rs 3.75 crore financial), or income Rs 1 crore plus net worth Rs 5 crore (Rs 2.5 crore financial); trusts and body corporates need Rs 50 crore.
- Investment limits: Category I and II at most 25% in one investee company, Category III at most 10%; investment in associates needs approval of 75% of investors by value; listed units trade in lots of at least Rs 1 crore.
- Category I (VC, angel, SME, social venture, infrastructure, special situations), Category II (PE, debt — no leverage beyond operations), Category III (hedge funds — complex strategies and leverage); angel investors need Rs 2 crore net tangible assets.
Exam tip: Part of Module 4 (23 marks). This chapter is almost entirely thresholds — Rs 20 crore, 1,000, Rs 1 crore, 2.5%/Rs 5 crore, 25%/10%, 75% — and category mapping ("a hedge fund is Category ___"). Drill it as flash cards.
Sample questions from this chapter
Five of the 20 questions in our free bank. Open the answer to see the explanation — every question in the mock test has one, in English and Hindi.
Question 1
An AIF consists of __________ funds
AIF में __________ फंड होते हैं।
- Mass marketमास मार्केट (आम जनता से जुटाए गए)
- Privately pooledनिजी रूप से एकत्रित (Privately pooled)
- Lumpsumएकमुश्त (Lumpsum)
- Limitedसीमित (Limited)
Show answer & explanation
Answer: B — Privately pooled
The SEBI (AIF) Regulations, 2012 define an AIF as primarily a privately pooled investment vehicle — funds pooled from select investors, not the general public. (Workbook sample question.)
SEBI (AIF) Regulations, 2012 के अनुसार AIF मुख्य रूप से निजी रूप से एकत्रित निवेश माध्यम है — धन चुनिंदा निवेशकों से जुटाया जाता है, आम जनता से नहीं। (वर्कबुक का नमूना प्रश्न।)
Question 2
A hedge fund classifies as a _____
हेज फंड को _____ में वर्गीकृत किया जाता है।
- Category 1 fundCategory I फंड
- Category 2 fundCategory II फंड
- Category 3 fundCategory III फंड
- None of the aboveइनमें से कोई नहीं
Show answer & explanation
Answer: C — Category 3 fund
Category III AIFs employ diverse or complex trading strategies and may use leverage, including through derivatives; hedge funds are included in this category. (Workbook sample question.)
Category III AIF विविध या जटिल ट्रेडिंग रणनीतियाँ अपनाते हैं और डेरिवेटिव सहित लीवरेज ले सकते हैं; हेज फंड इसी श्रेणी में आते हैं। (वर्कबुक का नमूना प्रश्न।)
Question 3
Alternative Investment Funds in India are currently regulated by:
भारत में Alternative Investment Funds वर्तमान में किसके द्वारा विनियमित हैं?
- SEBI (Venture Capital Funds) Regulations, 1996SEBI (वेंचर कैपिटल फंड) विनियम, 1996
- SEBI (Portfolio Managers) Regulations, 2020SEBI (पोर्टफोलियो मैनेजर) विनियम, 2020
- SEBI (Mutual Funds) Regulations, 1996SEBI (म्यूचुअल फंड) विनियम, 1996
- SEBI (Alternative Investment Funds) Regulations, 2012SEBI (वैकल्पिक निवेश फंड) विनियम, 2012
Show answer & explanation
Answer: D — SEBI (Alternative Investment Funds) Regulations, 2012
The SEBI (Alternative Investment Funds) Regulations 2012 currently regulate AIFs; the 1996 VCF Regulations were the earlier framework for venture capital.
SEBI (Alternative Investment Funds) Regulations 2012 वर्तमान में AIF को विनियमित करते हैं; 1996 के VCF Regulations वेंचर कैपिटल के लिए पहले का ढाँचा थे।
Question 4
According to the workbook, the essential characteristic of alternative investments is:
वर्कबुक के अनुसार वैकल्पिक निवेशों की आवश्यक विशेषता है:
- Guaranteed returnsगारंटीकृत रिटर्न
- Daily redemption at NAVNAV पर दैनिक रिडेम्प्शन
- Illiquidityअतरलता (Illiquidity)
- Low riskकम जोखिम
Show answer & explanation
Answer: C — Illiquidity
Traditional investments are liquid on-market opportunities, while the essential characteristic of alternative investments is illiquidity — they are off-market or complex structures without a ready market.
पारंपरिक निवेश तरल ऑन-मार्केट अवसर हैं, जबकि वैकल्पिक निवेशों की आवश्यक विशेषता अतरलता है — वे ऑफ-मार्केट हैं या ऐसी जटिल संरचनाएँ हैं जिनका तैयार बाज़ार नहीं है।
Question 5
What is the maximum number of investors permitted in a scheme of an AIF?
किसी AIF की एक स्कीम में अधिकतम कितने निवेशकों की अनुमति है?
- 1,0001,000 निवेशक
- 200200 निवेशक
- 500500 निवेशक
- 5,0005,000 निवेशक
Show answer & explanation
Answer: A — 1,000
No scheme of an AIF shall have more than one thousand investors (subject to the Companies Act, 2013 if it is a company), and funds are raised only by private placement.
किसी AIF की स्कीम में एक हज़ार से अधिक निवेशक नहीं होंगे (कंपनी होने पर Companies Act, 2013 के अधीन), और धन केवल प्राइवेट प्लेसमेंट से जुटाया जाता है।
See the NISM Study Hub for X-B (Investment Adviser Level 2) and the mutual fund distributor exams (V-A, V-D) too.
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