Category - I:
“Category I Alternative Investment Fund” means which invests in:
start-up or early-stage ventures,
social ventures,
SME funds
Infrastructure funds or
other sectors or areas which the government or regulators consider as socially or economically desirable
venture capital funds
social impact funds,
special situation funds
AIFs which are generally perceived to have positive spillover effects on economy and for which the Board or Government of India or other regulators in India might consider providing incentives or concessions.
Category - II:
“Category II Alternative Investment Fund” means:
private equity funds,
debt funds
for which no specific incentives or concessions are given by the government or any other Regulator shall be included.
It covers AIF which does not fall in Category I and III and which does not undertake leverage or borrowing other than as permitted in the SEBI regulations;
Category - III:
“Category III Alternative Investment Fund” means which employs diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives.
Alternative Investment Funds such as:
hedge funds
funds which trade with a view to make short term returns or such other funds which are open ended and for which no specific incentives or concessions are given by the government or any other Regulator shall be included.