Context:
The Securities and Exchange Board of India (Sebi) recently amended rules to allow Alternative Investment Funds (AIFs) to launch accredited investor-only schemes. Accredited investors (AIs) are sophisticated investors with high financial capacity and understanding, eligible for high-risk, high-return instruments.
Despite regulatory support, the accredited investor base in India remains small, raising questions about the impact of these reforms.
What Are Accredited Investors?
Accredited Investors (AIs) are financially sophisticated individuals or entities recognized by SEBI as having high financial capacity and risk-taking ability. They are allowed to invest in complex, high-risk, or customized investment products not typically available to retail investors.
The AI framework was introduced by SEBI in 2021 to deepen India’s capital markets and give flexibility to wealthy investors.
Sebi’s Definition of Accredited Investors (2021)
- Individuals, family trusts, sole proprietorships, partnerships with:
- Annual income ≥ ₹2 crore, or
- Net worth ≥ ₹7.5 crore with financial assets ≥ ₹3.75 crore
- Corporate bodies & non-family trusts: Net worth ≥ ₹50 crore
Recent Sebi Amendments (Nov 19, 2025)
- AIFs can now:
- Launch AI-only funds/schemes
- Convert existing AIFs into AI-only schemes
- Shift trustee responsibilities to fund managers
- 1,000-investor cap: No longer applies to AI-only funds
- Investment threshold: Removed for AIs, allowing smaller, diversified investments
