Capital markets regulator Sebi on Monday came out with guidelines for borrowing by Category I and Category II alternative investment funds (AIFs), along with the maximum permissible limit for extension of tenure by Large Value Fund for Accredited Investors (LVFs). Under the rule, Category I and II AIFs are not allowed to borrow or use leverage for investments, except in limited cases for temporary needs. These AIFs are allowed to borrow funds to address temporary funding needs or manage day-to-day operational expenses, with specific limitations. Such borrowing is permitted for up to 30 days, can occur no more than four times in a calendar year, and must not exceed 10 per cent of the investable funds. To facilitate ease of doing business and provide operational flexibility, Sebi has allowed Category I and Category II AIFs to borrow for the purpose of meeting temporary shortfall in amount called from investors for making investments in investee companies ('drawdown amount'), accordin