SEBI has proposed changes to the Accredited Investor framework to broaden the eligible investor pool to nearly 4 lakh people. The plan includes allowing fund managers to certify their own clients, a move that has sparked concerns regarding potential conflicts of interest. Public feedback on these proposals is open until September 3, 2026.
The Securities and Exchange Board of India (SEBI) has released a consultation paper to overhaul the Accredited Investor (AI) framework, aiming to simplify the onboarding process and significantly expand the pool of eligible participants. The regulator released these proposals on August 13, 2026, with the goal of increasing the accredited investor base from the current level of approximately 1 lakh to between 3.7 lakh and 4 lakh.
The most significant change proposed is the introduction of manager-led accreditation. Under this model, managers of Alternative Investment Funds (AIFs), Portfolio Management Services (PMS), and Specified Investment Funds (SIFs) would be permitted to certify potential investors directly. This shift aims to reduce the reliance on independent accreditation agencies, which SEBI suggests adds cost and complexity to the process. Additionally, the regulator has proposed new eligibility criteria based on securities market assets, setting the threshold at ₹5 crore for individuals and ₹20 crore for body corporates. Under these rules, all Persons Resident Outside India, including Foreign Portfolio Investors (FPIs), would be treated as deemed accredited investors.
While the objective is to improve the ease of doing business, the proposal has faced scrutiny from market observers. The primary concern revolves around the potential for a conflict of interest. Critics argue that by allowing investment managers to certify their own clients, the system might incentivize managers to prioritize client acquisition over strict due diligence. There is a fear that such a change could weaken the safeguards designed to protect investors, particularly when they are entering complex or high-risk financial products that require specialized oversight.
SEBI is currently seeking public comments on these proposals, with the consultation window remaining open until September 3, 2026. The next phase for investors and industry participants will be to monitor whether the regulator modifies the final guidelines to address the conflict of interest concerns, or if it proceeds with the manager-led accreditation model as currently drafted. The final decision will determine the future of how investors are qualified for higher-risk market avenues.