You can see the rules and regulations in other jurisdictions.
A mutual fund is a system, controlled and monitored by the SEBI via the MF Regulations and the Association of Mutual Funds in India, to amass funds from the public. This pool is then invested by a trained fund manager in a variety of asset classes, including both equity and debt securities. Recently, modifications made by SEBI have allowed venture-backed fintech start-ups to get involved as mutual fund sponsors and launchers.1
An alternative investment fund (AIF) is a pooled investment vehicle which requires substantial financial commitments from knowledgeable investors.The Securities and Exchange Board of India (SEBI) oversees the AIFs under its AIF Regulations, stipulating general restrictions as well as particular criteria for the AIF managers. The AIFs are designed in the form of a trust, a limited liability partnership or a company and can be classified into several classes based on their investment objectives.1
In India, collective investment schemes (CIS) take the form of a residual category. As per the SEBI, this category involves a company managing contributions by public investors and investing them to generate profits, income, produce or property. Any arrangement which amounts to pooling of funds above US$13.75 million and is not registered with the SEBI is classified as CIS. Nevertheless, cooperative societies, deposits by non-banking finance companies (NBFCs), public deposits under the Indian Companies Act, contracts of insurance, pension schemes and mutual fund contributions are excluded from this definition.1
India has recently seen an increase in alternative forms of capital raising, such as crowd-lending and crowdfunding.1
Crowd-lending platforms that enable peer-to-peer (P2P) based lending activities are now governed as NBFCs in India by the RBI with specific regulations (P2P Regulations). These rules, which define the registration and operational guidelines for P2P platforms, are less stringent than those applicable to other kinds of NBFCs since these platforms pose lower systemic risks. The role of P2P platforms is restricted to that of intermediaries or marketplace providers offering loan facilitation services for the parties involved.1
In India, crowdfunding initiatives that depend on rewards or donations are generally allowed but with limited regulatory oversight. With regard to equity-based crowdfunding, the legal position is still uncertain as the SEBI has not yet formed a law or expressed any clear viewpoint. It has issued a public statement urging investors to be vigilant when it comes to online platforms that offer fund raising services. These digital mediums are not allied nor awarded authorization under any Indian law and any transactions made on them would violate securities laws as well as the Indian Companies Act. Thus, owing to lack of regulatory lucidity and a supporting framework for equity-based crowdfunding, these activities are likely prohibited under present laws.1
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