The Securities and Exchange Board of India (SEBI) has proposed changes to the Accredited Investor framework aimed at increasing the number of investors eligible for greater flexibility in accessing certain investment products.
Under the proposed framework, securities market assets would be introduced as an additional eligibility criterion. Individuals holding securities market assets of at least ₹5 crore and body corporates with assets of at least ₹20 crore could become eligible for accreditation, alongside the existing income and net-worth requirements.
SEBI estimates that this single proposed criterion could increase the potential accredited investor pool to approximately 4 lakh investors, compared with the existing Alternative Investment Fund (AIF) investor base of around 1 lakh.
The proposals have been outlined in a consultation paper issued as part of a broader review of the Accredited Investor framework. The review follows feedback from market participants and recommendations of SEBI's Alternative Investment Policy Advisory Committee.
Accredited Investor status has become increasingly relevant as regulatory benefits associated with accreditation now extend to investment avenues including Alternative Investment Funds (AIFs), Specialised Investment Funds (SIFs), Portfolio Management Services (PMS) and Angel Funds.
Proposed Simplification of Accreditation Process
SEBI has also proposed introducing a manager-led accreditation mechanism in addition to the existing process through Accreditation Agencies. Under the proposed mechanism, accreditation facilitated by an investment manager would have group-level validity, potentially simplifying the onboarding process for eligible investors.
The regulator has further proposed standardising the validity period of accreditation at three years, based on the latest supporting documents submitted by the investor.
Proposed Expansion of Deemed Accredited Investor Category
Another key proposal concerns investors residing outside India. SEBI has suggested expanding the deemed Accredited Investor category to include all Persons Resident Outside India (PROIs) as defined under the Foreign Exchange Management Act, 1999.
If implemented, the proposal could enable Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and other eligible persons resident outside India to participate in AIFs without being subject to the existing minimum investment threshold applicable in relevant circumstances.
Current Status
The proposed changes are not yet final. SEBI has invited comments from stakeholders and the public as part of the consultation process. The framework may be modified after considering the feedback received before any final regulatory amendments are issued. CASansaar