Sebi Proposes New Asset Thresholds to Expand Accredited Investor Pool for Individuals and Corporates

The recent proposal by the markets regulator Sebi aims to expand the accredited investor pool significantly, with a focus on inclusivity and enhanced participation in alternative investment funds (AIFs). The initiative allows individuals with securities market assets of Rs 5 crore and body corporates with assets of Rs 20 crore to qualify as accredited investors, augmenting existing income and net-worth criteria. This strategic move is projected to increase the accredited investor base from 1 lakh to approximately 4 lakh, thereby facilitating a broader engagement within the investment community.

Under the proposed framework, eligible assets are defined to include a diverse range of instruments, such as equity and debt securities, REITs, InvITs, and AIF units, among others. The proposal not only underscores the importance of risk appetite among investors but also seeks to streamline the onboarding process. By introducing manager-led accreditation at a group level, Sebi aims to reduce bureaucratic hurdles while improving the efficiency of the accreditation process. Additionally, the validity of accreditation would be streamlined to three years, thereby enhancing long-term investment engagement.

Sebi’s suggestions also extend to foreign portfolio investors, designating them as deemed accredited investors, which could potentially attract more foreign capital into the Indian markets. The inclusion of comprehensive verification mechanisms, such as income-tax returns and recent broker statements, ensures a robust framework that maintains investor credibility while simplifying the accreditation process. This proposal embodies a significant evolution in the regulatory landscape and is expected to reinforce the growth trajectory of AIFs, Specialised Investment Funds (SIFs), and Portfolio Management Services (PMS).

Investors and market participants should closely monitor the developments surrounding this proposal, as the feedback period extends until September 3. The implications of this regulatory shift may not only transform how investors engage with the market but also enhance the liquidity and depth of India’s capital markets, presenting new opportunities for substantial returns in alternative investment avenues.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)