Self-Reliant India Fund

Why in news?

• The Minister for Micro Small and Medium Enterprises has informed Lok Sabha about the Self Reliant Fund and the other initiatives taken by the government for the MSME Sector.

About Self Reliant India Fund:

• It is a Category-II Alternative Investment Fund registered with SEBI. It was set up in 2021.
• It aims to provide growth capital to the deserving and eligible units of the MSME sector. 
• The total size of the fund is Rs. 50,000 Crore where Rs.10,000 Crore will come from the Government of India and Rs.40,000 Crore through Private Equity / Venture Capital funds.
• The Fund is an investment strategy of holding a portfolio of other investment funds, rather than investing directly. In the context of AIFs, a Fund of Fund is an AIF which invests in another AIF. 
  • SRI Fund will be a combination of Mother/Daughter Funds which will leverage private equity/ other funds and thus will multiply the impact of the initial budgetary infusion. 
  • The Mother Fund will provide funds only to the Daughter Funds for onward investment as growth capital, while the investment in MSMEs will be done by the Daughter Funds under the Fund. 
• SRI fund is implemented by a special purpose vehicle, NSIC Venture Capital Fund Limited, which is a 100 percent subsidiary of National Small Industries Corporation, a mini-Ratna.

PRACTICE QUESTION:

Consider the following statements regarding ‘Self Reliant India Fund’:

1. It is an Alternative Investment Fund registered with RBI

2. The Fund is an investment strategy of holding a portfolio of other investment funds, rather than investing directly

Which one of the following is correct in respect of the above statements?

(a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I

(b) Both Statement I and Statement II are correct and Statement II is not the correct explanation for Statement I

(c) Statement I is correct but Statement II is incorrect

(d) Statement I is incorrect but Statement II is correct.

Answer