SEBI has introduced a new Rs 5 crore securities-based threshold for individuals to gain accredited investor status. The updated framework allows fund managers to directly accredit their clients, aiming to simplify access to alternative investment products and reduce paperwork for high-net-worth participants.
The Securities and Exchange Board of India has finalized a significant update to the accredited investor framework, a move aimed at making it easier for high-net-worth individuals and large entities to access specialized investment products. This new policy sets a clear asset-based requirement for individuals, Hindu Undivided Families (HUFs), family trusts, and sole proprietorships, who must now hold at least Rs 5 crore in securities market assets to qualify. For body corporates and other trust structures, the required benchmark is higher at Rs 20 crore.
A key feature of the new guidelines is the shift toward a manager-led accreditation system. Previously, investors often faced a more complex verification process to prove their status. Now, managers of Alternative Investment Funds (AIFs), Portfolio Management Services (PMS), and Specialised Investment Funds are authorized to directly accredit their clients. This change is intended to remove redundant verification layers and reduce the administrative costs that financial institutions and investors previously faced.
Once granted, this accreditation will remain valid for three years. Additionally, SEBI has introduced portability, meaning an investor who is accredited by one entity can carry that status across different products offered within the same financial group, provided they meet the necessary criteria.
The framework also broadens the reach by including international participants. Under the new rules, foreign investors—defined as persons residing outside India under the Foreign Exchange Management Act—are now automatically considered accredited. This inclusion is intended to make it more straightforward for foreign capital to flow into India's alternative investment space. Limited Liability Partnerships (LLPs) have also been included, provided their individual partners meet the established accreditation criteria.
For market participants, this shift lowers the administrative barriers for products that were previously harder to access due to documentation friction. By making the accreditation process faster and more direct, the regulator aims to deepen the domestic market for alternative investments. Investors looking to participate in these specialized funds should note that while access has become easier, these investment avenues typically carry different risk and liquidity profiles compared to standard public equity markets. The next important step will be watching how quickly fund managers adopt these new direct verification processes and how it influences the flow of capital into these alternative products.