Module: | MODULE A: INTERNATIONAL BANKING
Q228: Consider the following statements regarding the operations of Alternative Investment Funds within the smart city:
Statement 1: Venture Capital and Private Equity funds are legally categorized and regulated as Category 1 and Category 2 Alternative Investment Funds within the centre's unified regulatory framework.
Statement 2: Specialized Angel Funds operating in the centre are legally restricted to raising capital exclusively from domestic retail investors using Indian Rupees.
Which of the statements given above is or are INCORRECT?
Statement 2: Specialized Angel Funds operating in the centre are legally restricted to raising capital exclusively from domestic retail investors using Indian Rupees.
Which of the statements given above is or are INCORRECT?
✅ Correct Answer: B
The question asks to identify the incorrect statement.
Statement 1 is a correct statement.
The centre's unified regulator fundamentally mirrors global and domestic classifications where Venture Capital funds, which invest primarily in early-stage startups, fall under Category 1, and Private Equity funds, which invest in mature unlisted companies, fall under Category 2. Statement 2 is the incorrect statement.
Alternative Investment Funds, including specialized Angel Funds, operate in an offshore environment specifically designed for sophisticated wealth.
They are strictly prohibited from raising funds from ordinary domestic retail investors.
Furthermore, because they are offshore entities, they must raise capital from eligible sophisticated wholesale investors, high-net-worth individuals, and foreign institutions primarily in freely convertible foreign currencies, completely negating the use of the Indian Rupee for core capital gathering.
Statement 1 is a correct statement.
The centre's unified regulator fundamentally mirrors global and domestic classifications where Venture Capital funds, which invest primarily in early-stage startups, fall under Category 1, and Private Equity funds, which invest in mature unlisted companies, fall under Category 2. Statement 2 is the incorrect statement.
Alternative Investment Funds, including specialized Angel Funds, operate in an offshore environment specifically designed for sophisticated wealth.
They are strictly prohibited from raising funds from ordinary domestic retail investors.
Furthermore, because they are offshore entities, they must raise capital from eligible sophisticated wholesale investors, high-net-worth individuals, and foreign institutions primarily in freely convertible foreign currencies, completely negating the use of the Indian Rupee for core capital gathering.