SEBI has proposed changes for Category II Alternative Investment Funds (Cat II AIFs), allowing them to invest more than 50% of their funds in listed debt securities rated ‘A’ or below, in addition to unlisted securities. This adjustment comes in response to new regulations affecting Non-Convertible Debentures (NCDs), which may limit investment opportunities in unlisted debt securities. Currently, 192 AIF schemes predominantly invest in unlisted securities, and the change aims to maintain funding for industries lacking access to traditional financing. Stakeholders can provide feedback on this proposal until February 28.