Chapter III-B · Special Situation Funds
Regulation 19M
Investment by special situation funds
Chapter III-B · Special Situation Funds
SEBI (Alternative Investment Funds) Regulations, 2012
In plain English
In plain English
A special situation fund invests only in special situation assets and may act as a resolution applicant under the Insolvency and Bankruptcy Code. It cannot invest in its associates, in units of AIFs other than special situation funds, or in special situation funds managed or sponsored by its own manager, sponsor or their associates. Investments in stressed loans acquired under the RBI directions follow the further conditions in this regulation.
What the Master Circular adds
From SEBI's Master Circular for AIFs (updated 16 June 2026). The Regulation sets the rule; the Master Circular sets how it works in practice.
- MC Ch 9
Stressed loans acquired by a special situation fund under the RBI directions are locked in for at least six months.
Where this sits
Regulation 19M is in Chapter III-B — Special Situation Funds of the SEBI (Alternative Investment Funds) Regulations, 2012.
Provisos, explanations and conditions
Quoted from the regulation text. These qualify or carve out exceptions to the main rule.
Provided that the special situation fund shall not invest in, i. its associates; or ii. the units of any other Alternative Investment Fund other than the units of a special situation fund; or iii. units of special situation funds managed or sponsored by its manager, sponsor or associates of its manager or sponsor.
What changed
No change to this regulation by the 2026 amendments (No. 303 of 16 April 2026 and No. 313 of 10 July 2026).
Where it connects
The text of this regulation does not refer to other numbered regulations.
Related Master Circular chapters (by subject)
Chapter
Check yourself
1 practice question on Regulation 19M, each with an explanation for every option.
- Which statement about special situation funds is correct?
The regulation
19M. (1) Special situation funds shall invest only in special situation assets and may act as a resolution applicant under the Insolvency and Bankruptcy Code, 2016:
Provided that the special situation fund shall not invest in, i. its associates; or ii. the units of any other Alternative Investment Fund other than the units of a special situation fund; or iii. units of special situation funds managed or sponsored by its manager, sponsor or associates of its manager or sponsor.
(2) Any investment by a special situation fund in the stressed loan acquired under clause 58 of the Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 as amended from time to time shall be subject to lock-in period as may be specified by the Board.] CORPORATE DEBT MARKET DEVELOPMENT FUND
Text from the consolidated Regulations. Square brackets and [***] mark earlier amendments and omissions, as in the official text. Check the official Gazette text before relying on it.
Last checked against source on 10 October 2026: consolidated Regulations to 19 November 2025, read with Amendment Regulations No. 303 (16 April 2026) and No. 313 (10 July 2026).
Source and verification
- Instrument
- SEBI (Alternative Investment Funds) Regulations, 2012 — Regulation 19M
- Text used
- Consolidated Regulations as amended up to 19 November 2025, read with the 2026 amendments (no change to this regulation)
- Last checked
- 10 October 2026
- Official source
- www.sebi.gov.in → Legal → Regulations. The Gazette text prevails.
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