Securities and exchange board of India (Sebi) proposed today in a consultation paper to allow individual investors with security market assets in excess of Rs 5 crore and body corporates with security market assets above Rs 20 crore to be classified as accredited investors (AIs).
The security market assets eligible under the proposal include assets in demat form like equity and debt instruments, REITs/InvITs, AIF units along with mutual funds, futures open interest positions, unlisted securities in demat forms and overseas securities market instruments.
Currently, investors are required to have a minimum net worth of Rs 7.5 crore with at least Rs 3.75 crore in financial assets (including security market assets, bank fixed deposits, certificates of deposit etc.)
The AI framework is for sophisticated investors who are given access to markets with lower requirements and regulatory oversight. The regulator aims to widen the accredited investor base which stands at 96,000 currently to grow 4x with this proposal by making about Rs 3.7 lakh investors eligible to become AIs.
Due to their perceived higher risk-taking capacity, AIs are exempted from the minimum ticket size requirements in various products like SIF, PMS and AIF. The regulator proposed that the investment manager or asset management entities (“managers”) of these products be permitted to determine and record the accreditation status of an investor.
The accreditation will be undertaken each time an investor is onboarded by the entity and will be valid for a period of three years. The investor will be required to get accreditation only once by the entity and will be valid across all its products. The managers can also recognize an investor as AI during the tenure of their existing schemes.
Further, investors identified as AIs will retain their status for the remaining life of a particular scheme, regardless of whether they fulfil the criteria evaluated during onboarding. The managers will be responsible for record keeping and compliance with the relevant regulations.
The regulator also specified that the current accreditation agency framework will continue besides the newly proposed framework.
Further, the regulator also proposed to extend the AI framework to all Person Resident Outside India (PROI), including all FPIs, as per FEMA regulations. The current AI framework already central and state governments, developmental agencies and funds set up by them, Qualified Institutional Buyers (QIBs), Cat I FPIs, sovereign wealth funds and multilateral agencies are included in the AI framework.
Along the same lines, the regulator proposed to extend the AI framework to limited liability partnerships (LLPs) where each partner is an AI, a wholly owned subsidiary (entirely owned and controlled by the parent) if the parent company holds the minimum net-worth.
The regulator asked all relevant stakeholders to share their comments on the proposal by September 3, 2026.