SEBI released a consultation paper on August 13, 2026, proposing a simpler accredited investor framework to ease access to high-risk funds like AIFs and Portfolio Management Services. The plan allows fund managers to verify investor status directly and includes foreign residents, aiming to increase capital flows into specialized investment products.
On August 13, 2026, the Securities and Exchange Board of India (SEBI) issued a consultation paper detailing significant changes to its accredited investor framework. The move is designed to simplify the process for both domestic and foreign investors who wish to access sophisticated, higher-risk investment products, such as Alternative Investment Funds (AIFs) and Portfolio Management Services (PMS).
Currently, gaining accredited investor status often requires verification through independent, third-party agencies. SEBI is now proposing to allow fund managers to determine an investor's status directly during the onboarding process. This shift is intended to reduce administrative hurdles and speed up the entry process for investors seeking to participate in private markets and specialized financial vehicles.
New Thresholds and Expanded Scope
The regulator has outlined specific financial criteria for accreditation under the new proposal. To qualify, individuals would need to hold securities worth at least Rs 5 crore, while corporate entities would need to demonstrate a securities holding of Rs 20 crore. Furthermore, SEBI is looking to expand the scope of this framework. While the current system primarily focuses on AIFs, the new proposal would include portfolio managers and other specialized investment funds, broadening the range of products available to accredited participants.
Global Access and Market Impact
A notable part of the proposal is the inclusion of individuals residing outside India. By allowing non-residents to qualify as accredited investors without requiring a separate and complex accreditation process, SEBI aims to attract more global capital into India's alternative asset classes. This is expected to potentially boost the inflow of foreign capital, as it removes one of the key barriers for international entities looking to invest in India's private and specialized investment landscape.
Investor Risks and Considerations
It is important for investors to understand that products like AIFs and PMS are generally tailored for financially sophisticated participants and carry risks that differ significantly from standard mutual funds or stock market investments. While the move towards manager-led accreditation aims to streamline entry, it places a higher level of responsibility on fund managers to perform thorough due diligence during onboarding. Investors should be aware that the proposal is currently in the consultation stage, which means the final regulations could be modified based on industry feedback. The primary monitorable for the market will be the final notification of these rules and whether the industry can maintain high due diligence standards once the process is simplified.