SEBI Relaxes Accredited Investor Norms for AIF, SIF and PMS; Introduces Rs 5 Crore and Rs 20 Crore Securities Exposure Criteria

The Securities and Exchange Board of India (SEBI) has relaxed the Accredited Investor framework to simplify eligibility verification for investors seeking to invest in Alternative Investment Funds (AIFs), Specialised Investment Funds (SIFs) and Portfolio Management Services (PMS). Announced on November 5, 2026, the revised framework allows investment managers to directly assess an investor's accreditation status, reducing dependence on third-party accreditation agencies.

Under the amended regulations, AIF managers, asset management companies managing SIFs and registered portfolio managers can independently verify whether investors meet the prescribed eligibility criteria. Previously, accreditation was primarily obtained through certification by recognised accreditation agencies. The manager-led verification process is an alternative route and does not replace the existing certification mechanism. Managers can assess an investor's accreditation status during onboarding or at any time during the life of a scheme.

Once an investor is accredited, the status can be recognised by other investment managers within the same corporate group. However, managers outside the group must conduct a fresh assesSMEnt unless the investor holds a valid certificate issued by a recognised accreditation agency. These changes follow amendments to the AIF Regulations notified on October 15, 2026.

SEBI has also introduced securities market exposure as an additional eligibility criterion alongside the existing income and net worth requirements. The minimum qualifying securities exposure has been set at Rs 5 crore for individuals, Hindu Undivided Families (HUFs), family trusts and proprietary concerns. For body corporates and trusts other than family trusts, the minimum requirement is Rs 20 crore.

Both manager-led accreditations and certificates issued by recognised accreditation agencies will remain valid for three years. Investors accredited at the time of joining a scheme will continue to be treated as accredited for the entire duration of that scheme, even if their original accreditation period expires. Investment managers must retain accreditation records for at least five years, depending on the date the investor exits the scheme.

Eligible securities exposure includes holdings in listed and unlisted securities held in demat form, Mutual Funds, overseas securities investments and National Pension System (NPS) investments. Eligibility can be established through income Tax returns, audited financial statements, electronic consolidated account statements or certificates issued by practising Chartered Accountants, depending on the criterion being assessed.

The revised framework is expected to reduce procedural delays and simplify the onboarding process for investors in AIFs, SIFs and PMS. Investment managers can now verify eligible investors internally instead of relying exclusively on external accreditation agencies. SEBI has also clarified that Persons Resident Outside India (PROIs) will be deemed Accredited Investors without requiring separate accreditation, although other applicable regulatory due diligence requirements will continue to apply.

Limited Liability Partnerships (LLPs) can also qualify as Accredited Investors, provided each partner independently meets the relevant eligibility conditions. This makes the framework applicable to a wider range of eligible investor structures.

Despite simplifying the process, SEBI has retained compliance and investor protection requirements. Investment managers undertaking accreditation must maintain supporting documentation and conduct periodic internal compliance reviews. They are also required to establish policies covering conflicts of interest, investor complaints, data privacy and cybersecurity. Furthermore, the accreditation function must remain separate from business development and distribution activities.

Investment advisers and research analysts can rely on a valid accreditation determination made by an investment manager within their corporate group. However, they are not permitted to independently determine an investor's accredited status.

The revised framework does not dilute the underlying financial eligibility requirements or eliminate the risks associated with sophisticated investment products. Effective November 5, 2026, the changes primarily simplify the administrative process for eligible investors while placing greater responsibility on investment managers to verify, document and monitor accreditation status.

Disclaimer: The article is for informational purposes only and not investment advice.