Will AIFs get to certify accredited investors? The decision is close
Under Sebi rules, only CDSL Ventures Ltd and NSDL Data Management Ltd can certify accredited investors, making it an arduous process for investors.
A top committee at the Securities and Exchange Board of India (Sebi) is close to deciding whether alternative investment funds (AIF) should be allowed to fully certify accredited investors. The AIF industry has pressed for such authority on the lines of how it is done in GIFT City, two industry executives said on the condition of anonymity.
Accredited investors are individuals or entities presumed to have sufficient financial knowledge to understand high-risk products, meeting specific income or net-worth thresholds. Certification as an accredited investor is currently handled only by designated accreditation agencies, which include subsidiaries of stock exchanges and depositories.
“The industry has asked Sebi to allow us to certify accredited investors, similar to how it's done in GIFT City," one of the two executives cited above said. “The Alternative Investment Policy Advisory Committee (AIPAC) has wrapped up discussions. We are waiting to hear back from Sebi," the person said.
Queries emailed to Sebi remained unanswered.
Under the current framework, only CDSL Ventures Ltd, a subsidiary of Central Depository Services (India) Ltd, and NSDL Data Management Ltd, an arm of National Securities, can certify accredited investors, making it an arduous process for investors.
In June, the market regulator released a consultation paper proposing that all KYC-registration agencies (KRAs) be allowed to provide accreditation, while allowing AIF managers to provisionally onboard investors based on their own due diligence. Public consultations on the draft concluded in July. However, there have been no further developments.
The latest discussions, which wound up in November, is about allowing AIFs to fully onboard investors as accredited by carrying out checks on their net worth and financials.
Accredited investors must have an annual income of at least ₹2 crore, or net worth of ₹7.5 crore with minimum financial assets of ₹3.75 crore. Corporate bodies and non-family trusts with net worth of ₹50 crore also qualify.
“The idea is to get them self-certified through an AIF. Sebi and the industry are keen on these changes as the current process for accreditation is quite cumbersome. So, there is a good chance the changes will be adopted," said the second person quoted above.
A similar framework already exists in GIFT city. Accreditation is verified by a fund management entity (FME) or another authorized body using recent financial statements. After accreditation, investors can complete KYC through authorized GIFT City channels, leveraging digital processes such as Aadhaar and PAN verification. Sebi and the AIF industry are looking to adopt a similar framework to ease the current registration process.
The primary benefit of being an accredited investor is a lowered threshold for investing in AIFs, where one has to normally commit a minimum of ₹1 crore. This means they can commit smaller sums across different schemes and spread their risk more efficiently. Accredited investors can also access private placements and venture capital funds.
Accredited investor enrollment remains modest, according to Sebi’s September board documents. While more than 72,000 people and entities have invested in AIFs, fewer than 1,000 have obtained the status. The count stood at 649 in the regulator’s June board papers.
Sebi has partly attributed the modest uptake to the recent easing of rules and the presence of “deemed" accredited investors, whose participation does not show up in accreditation statistics.
“The number of accredited investors has not picked up as expected. These changes are expected to make the process of accreditation easier and motivate people to become accredited," the person cited earlier said.
“People are not willing to get accredited because the process is complicated and they don't get much in return. The benefit-to-effort ratio is not very attractive," said Ananya Roy, founder at Credibull Capital, an advisory firm. "Simplifying the process through AIFs will solve one part of the problem. The regulator should make a wider array of products available, which will allow accredited investors to take more risk."
Registered AIFs had collectively raised over ₹6.36 trillion in gross capital, with investments amounting to ₹6.12 trillion, as of September 2025, Sebi data shows. Data for AIF inflows by AIs is not publicly available.
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