Description

SEBI settles enforcement proceedings against Unicorn India Ventures Debt Fund-I and associated entities for temporarily investing uninvested funds in a non-liquid mutual fund scheme in violation of AIF Regulations.

Summary

SEBI issued a Settlement Order (SO/2026-27/PSD/1-4) settling enforcement proceedings against four applicants — Unicorn India Ventures Debt Fund-I (a Category II AIF), its manager Unicorn India Ventures Services LLP, and Key Managerial Personnel Anil Joshi and Bhaskar Majumdar — in the matter of Unicorn India Ventures Fund III. The violations relate to a temporary investment of uninvested funds in a non-liquid mutual fund scheme during May 2023 and failure to report this non-compliance in the Compliance Test Report for FY 2023-24.

Key Points

  • Unicorn India Ventures Debt Fund-I is registered as a Category II Alternative Investment Fund; Unicorn India Ventures Fund III is its only active scheme.
  • During May 15–24, 2023, the Fund temporarily invested uninvested/divestment proceeds in Aditya Birla Sun Life Savings Fund Regular Growth Plan, which is a savings scheme and NOT a liquid mutual fund as mandated by Regulation 15(1)(f) of the SEBI (AIF) Regulations, 2012.
  • The Fund failed to disclose this non-compliant deployment in its Compliance Test Report (CTR) for FY 2023-24.
  • The Fund subsequently rectified the error by reallocating money to a liquid mutual fund scheme.
  • Notices of Summary Settlement were issued on November 03, 2025 under Regulation 16 of the SEBI (Settlement Proceedings) Regulations, 2018.
  • The agreed settlement amount is ₹25,50,000 (Rupees Twenty-Five Lakhs Fifty Thousand), payable jointly and severally by all applicants.

Regulatory Changes

No new regulatory changes introduced. The order reaffirms existing requirements under:

  • Regulation 15(1)(f) of the SEBI (AIF) Regulations, 2012 — uninvested/divestment proceeds must be held only in liquid mutual funds, bank deposits, or other high-quality liquid assets.
  • Regulations 20(1), 20(2), and 20(5) — obligations of the Fund and Manager.
  • Regulation 24(e) and 28 of the AIF Regulations read with para 15.2 of the Master Circular for AIFs dated May 07, 2024 — reporting and CTR obligations.
  • Clauses 2(a) and 2(c) of the Code of Conduct in Schedule IV of the AIF Regulations.

Compliance Requirements

  • AIFs must ensure that uninvested corpus and divestment proceeds pending distribution are placed only in liquid mutual funds, bank deposits, or equivalent high-quality liquid instruments — savings or non-liquid schemes are not permissible.
  • Any non-compliance in deployment of funds must be accurately disclosed in the Compliance Test Report (CTR) for the relevant financial year.
  • Managers and Key Managerial Personnel are jointly responsible for ensuring regulatory compliance and accurate reporting.

Important Dates

  • May 15–24, 2023: Period of non-compliant investment in Aditya Birla Sun Life Savings Fund Regular Growth Plan.
  • FY 2023-24: CTR in which the non-compliance was not disclosed.
  • November 03, 2025: Notices of Summary Settlement issued to all applicants.
  • May 07, 2024: Date of Master Circular for AIFs referenced in the order.

Impact Assessment

This settlement order has minimal direct market impact as it pertains to a technical, internal fund management violation by a private AIF. The violation — parking uninvested corpus in a savings scheme rather than a liquid scheme for approximately 10 days — was self-corrected by the Fund. The settlement amount of ₹25.5 lakhs reflects the limited severity. The order serves as a reminder to all Category II AIF managers of the strict eligibility criteria for temporary deployment of investable funds and the importance of accurate CTR disclosures.

Impact Justification

Routine settlement order for a technical AIF compliance violation (investment in savings scheme vs liquid scheme) that was self-rectified; settlement amount of ₹25.5 lakhs is modest and there is no broader market impact.