SEBI has proposed a new manager-led accreditation route to simplify how investors qualify for complex market products. The plan, aimed at expanding the investor pool, sets eligibility at ₹5 crore for individuals and ₹20 crore for corporate bodies. This shift could allow more investors to access sophisticated investment vehicles like Alternative Investment Funds (AIFs), though it brings increased compliance requirements for fund managers.
The Securities and Exchange Board of India (SEBI) has released a consultation paper proposing significant changes to the framework for accredited investors in India. These proposals aim to make it easier for high-net-worth individuals and corporate entities to qualify as accredited investors, thereby opening up access to a wider range of sophisticated financial products.
Currently, the accreditation process relies on a third-party agency system. SEBI is now proposing to introduce a parallel 'manager-led' accreditation route. Under this new model, investment managers—the entities that manage the financial products—would be permitted to assess and record an investor's accredited status during the initial onboarding phase. This could significantly speed up the process for investors. Once accredited under this manager-led route, the status would remain valid for up to three years for products handled by the same manager, provided the investor continues to meet the eligibility criteria.
To broaden the eligibility pool, the regulator has suggested a new asset-based criterion. Individuals holding at least ₹5 crore in securities market assets would qualify as accredited investors. For corporate bodies, the proposed threshold is ₹20 crore. SEBI has clarified that 'securities market assets' would cover a broad list, including demat equity, debt, Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), Alternative Investment Fund (AIF) units, mutual funds, futures open interest, unlisted securities in demat form, and overseas market investments.
This move is estimated to bring approximately 3.7 lakh additional investors into the accredited category, a significant jump from the existing 96,000 investors currently registered under AIFs. Furthermore, the proposal includes granting deemed accredited status to all persons resident outside India, including foreign portfolio investors, which could streamline their participation in Indian market products.
While these changes may facilitate easier access to investment opportunities, they also introduce new responsibilities. The shift places the onus on investment managers to maintain robust systems for verifying and recording investor status. SEBI has emphasized that these measures are intended to prevent self-certification and ensure that managers maintain strict compliance records. For the broader market, the expansion of the accredited investor pool means that more individuals could be exposed to complex, higher-risk financial products. Consequently, the primary monitorable for investors will be how effectively fund managers implement these new compliance frameworks to ensure accurate classification and prevent potential mis-selling in a more inclusive market environment.