UPSC Prelims Practice Questions — SEBI amends alternative investment fund rules

Q1. As per SEBI's April 2026 amendment, what is the revised minimum investment (in rupees) required from an individual investor in a Social Impact Fund?

  • A. ₹500
  • B. ₹1,000
  • C. ₹10,000
  • D. ₹2,00,000

Q2. Under the SEBI (Alternative Investment Funds) Regulations, 2012, which one of the following correctly describes a Category III AIF?

  • A. A fund investing in start-ups, SMEs, infrastructure or social ventures that SEBI considers socially or economically desirable
  • B. A fund that employs diverse or complex trading strategies and may use leverage, including through investment in listed or unlisted derivatives
  • C. A fund that does not undertake leverage other than to meet day-to-day operational requirements, such as a private equity or debt fund
  • D. A fund set up exclusively to channel government grants into rural infrastructure projects

Q3. Under the SEBI (Alternative Investment Funds) Regulations, 2012, which one of the following is the only category of AIF that is permitted to be open-ended?

  • A. Category I
  • B. Category II
  • C. Category III
  • D. None — every category of AIF must compulsorily be close-ended

Q4. With reference to Zero Coupon Zero Principal (ZCZP) instruments on the Social Stock Exchange, consider the following statements. Which of the statements given above is/are NOT correct?

  1. They may be issued only by a Not-for-Profit Organisation registered on the Social Stock Exchange.
  2. They carry no coupon and no principal amount is repayable to the investor on maturity.
  3. They are freely tradable in the secondary market like listed equity shares.
  4. Funds raised through them are treated as a grant to the issuing organisation.
  • A. 1 and 2
  • B. 3 only
  • C. 2 and 4
  • D. 3 and 4

Q5. As per SEBI's Social Stock Exchange framework, for a minimum of how many years must a Not-for-Profit Organisation have been registered (as a charitable trust/society) to be eligible to register on the SSE?

  • A. 1 year
  • B. 2 years
  • C. 3 years
  • D. 5 years

Q6. With reference to the 'Inoperative Fund' status introduced by SEBI for Alternative Investment Funds in 2026, consider the following statements. Which of the statements given above is/are NOT correct?

  1. A fund under this status is not permitted to launch any new scheme.
  2. No management fees can be charged by the fund once it is under this status.
  3. It is meant for funds that have substantially completed winding-up but must retain limited amounts for pending liabilities.
  4. It allows the fund to raise fresh capital from new investors to revive its operations.
  • A. 1 only
  • B. 4 only
  • C. 3 and 4
  • D. 2 and 4

Q7. The 'Inoperative Fund' status for Alternative Investment Funds, introduced in 2026, is granted and operationalised by which one of the following authorities?

  • A. Reserve Bank of India
  • B. Securities and Exchange Board of India
  • C. Insolvency and Bankruptcy Board of India
  • D. Ministry of Corporate Affairs

Q8. The Securities and Exchange Board of India (SEBI) functions under the administrative control of which one of the following Union Ministries?

  • A. Ministry of Corporate Affairs
  • B. Ministry of Finance
  • C. Ministry of Commerce and Industry
  • D. Ministry of Statistics and Programme Implementation

Q9. Which one of the following statements correctly describes the legal/statutory status of SEBI?

  • A. SEBI was created directly as a statutory body by the SEBI Act, 1992, in the year 1988.
  • B. SEBI was set up as a non-statutory body in 1988 and was granted statutory status through the SEBI Act, 1992.
  • C. SEBI is a constitutional body established under Article 324 of the Constitution of India.
  • D. SEBI is a statutory body established under the Companies Act, 2013.

Q10. Alternative Investment Funds, Mutual Funds and Portfolio Management Services in India are all regulated by which one of the following?

  • A. Reserve Bank of India
  • B. Securities and Exchange Board of India
  • C. Mutual Funds by SEBI, while AIFs and PMS are regulated by the Reserve Bank of India
  • D. The Ministry of Finance directly, through the Department of Economic Affairs

Q11. The framework formally establishing 'co-investment schemes' (CIV) for accredited investors of Category I and II AIFs, and requiring angel funds to onboard only accredited investors, was introduced through which one of the following?

  • A. SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2025
  • B. SEBI (Alternative Investment Funds) (Amendment) Regulations, 2026
  • C. SEBI (Mutual Funds) (Amendment) Regulations, 2024
  • D. SEBI (Portfolio Managers) (Amendment) Regulations, 2023