SEBI Moves To Widen India’s Accredited Investor Pool

An accredited investor is a person SEBI recognises as having the financial capacity and sophistication to bear the risks of complex investment products. Accredited status acts as a gateway to SEBI-regulated products, including Alternative Investment Funds (AIFs) and Portfolio Management Services (PMS), and relaxes minimum ticket sizes. To qualify, an investor must meet an income or net worth threshold and obtain certification from a SEBI-recognised accreditation agency.

Despite the framework being introduced in 2021, just 3,820 investors held accreditation certificates as of July 31, 2026 as against the current strength of 96,000 total AIF investors.

On August 13, 2026, SEBI issued a consultation paper proposing to reform the accredited investor framework, with the stated aim of easing accreditation and deepening the pool of risk capital. 

This article maps the key proposals against the current position with a brief analysis on its impact.

1. Manager-led accreditation (Proposals 1 to 5)

• CURRENT FRAMEWORK. An investor must first approach an independent accreditation agency, being a subsidiary of a stock exchange or depository, which verifies income or net worth and issues a certificate. Only then does the investor approach the manager (of an AIF or PMS ), who verifies that certificate. The certificate is valid for two years, or three years where the investor met the criteria in each of the two preceding financial years. 

• PROPOSAL. A manager of an AIF or PMS may itself determine and record accredited status at onboarding. Accreditation is done afresh for each different manager. For the same manager, recognised at group entity level, it is valid for three years across funds. The agency route continues as an optional parallel route, and its validity would be aligned to the same three-year norm . Self-certification by the investor is not permitted.

• IMPACT. This is a significant move as it removes the separate agency touchpoint and will cut costs and recurring paperwork. In our experience, investors have been reluctant to disclose their financial data to external agencies. However, it also creates a conflict of interest, as the manager gains fees from the investor. SEBI has therefore proposed some safeguards, including a laid-down accreditation policy of the manager, record keeping, independent audit and an accountability framework. It is a step in the right direction as it will assuage investors to some extent, in sharing sensitive financial information with third party agencies.

2. Securities market assets as a new eligibility route (Proposal 6)

• CURRENT FRAMEWORK. Individual eligibility for accreditation rests on income or net worth. There is no route based on market holdings alone.

• PROPOSAL. An additional route for accreditation based on securities market assets is proposed, at INR 50 million for individuals and INR 200 million for body corporates. Value is verified through a consolidated account statement, broker statement, or a CA certificate.

• IMPACT. This recognises wealth built through the market rather than income or reported net worth. SEBI estimates about 370,000 new investors would become eligible, close to four times the above AIF investor base of around 96,000.

3. Deemed Accreditation for Non-residents (Proposal 7)

• CURRENT FRAMEWORK. Deemed accredited status, which needs no certificate, is limited to specified categories: the Central and State Governments and their agencies and funds, qualified institutional buyers, Category I foreign portfolio investors (FPIs), sovereign wealth funds and multilateral agencies. Other non-residents must be accredited on the criteria applicable to body corporates.

• PROPOSAL. Extend deemed accredited status to all persons resident outside India (PROI), including all FPIs.

• IMPACT. NRIs, OCIs and all FPIs would skip separate accreditation. SEBI reasons that these investors already sit under FEMA and FPI oversight. A resident individual must show income of INR 20 million, or net worth of INR 75 million, or now securities of INR 50 million. A non-resident individual would need to show only their residency status and would then get AIF access with no minimum ticket, PMS with no floor, angel fund access as a deemed QIB, co-investment vehicle access, and the reduced Special Situation Fund ticket. A resident who cannot clear the thresholds gains an incentive to route capital through a non-resident structure or an NRI family member to reach deemed status. FEMA has anti-round-tripping and ODI/OI controls, but the incentive may get created with this proposal.

4. Look-through for LLPs and Subsidiaries (Proposals 8 and 9)

• CURRENT FRAMEWORK. Only a partnership firm enjoys a look-through, where each partner must be individually accredited. An LLP, being a body corporate, must itself meet the INR 50 crore net-worth test, and a wholly owned subsidiary must qualify on its own.

• PROPOSAL. An LLP may be accredited if each partner is individually accredited. A wholly owned subsidiary may be accredited if the parent company meets the net-worth threshold. Both are put out for wider views.

• IMPACT. The look-through logic is extended, but two questions remain. For LLPs, status may need to be re-tested when partners change, however the current proposal does not provide for such triggers and ensuing mechanism for retesting. For subsidiaries, the parent’s net worth may not reflect loss absorption capacity at the subsidiary, which is the entity bearing the risk.

Taken together, the proposals should lower friction, widen eligible base, and encourage wider infusion of risk capital in the economy. SEBI itself estimates the eligible base could rise to about four times the current AIF investor base. There remains a trade-off between convenience on one hand, and independence and investor protection on the other which is to be seen when SEBI issues the final framework. Firms in the AIF, PMS and wealth management space should assess the operational build for manager-led accreditation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.