Summary:
SEBI has relaxed accredited investor norms for Alternative Investment Funds (AIFs), Specialised Investment Funds (SIFs) and Portfolio Management Services (PMS). The revised framework allows investment managers to directly verify investor eligibility, simplifying accreditation while retaining financial criteria and compliance requirements.
The Securities and Exchange Board of India (SEBI) has tweaked the Accredited Investor framework to make it easier for investors to check their eligibility to invest in Alternative Investment Funds (AIFs), Specialised Investment Funds (SIFs) and Portfolio Management Services (PMS).
The new framework, announced Nov. 5, 2026, gives investment managers the ability to directly assess an investor’s accreditation status, reducing the need for third-party accreditation agencies.
What Has SEBI Changed?
Under the amended regulations, managers of AIFs, asset management companies managing SIFs and registered portfolio managers are permitted to check whether an investor meets the stipulated eligibility criteria.
Before that accreditation was a matter of certification by recognized accreditation bodies.
The new process led by the manager is an alternative route, not a replacement of the existing system.
Managers can check the accreditation status when onboarding an investor or at any time during the life of the scheme.
Once accredited, an investor’s status may be recognized by other investment managers within the same corporate group.
Managers outside this group will, however, have to make a new determination unless the investor holds a valid certificate from a recognized accreditation agency.
The changes are a result of the amendments to the AIF Regulations notified on 15th October 2026.
New Criteria of Eligibility & Validity of 3 Years
Besides the criteria of income and net worth, SEBI has added one more criterion for becoming an accredited investor, that is securities market exposure.
The minimum qualifying securities exposure has been laid down as follows:
- Individuals, Hindu undivided families, family trusts and proprietary concerns ₹5 crore.
- Body corporates and trusts (not family trusts) ₹20 crore.
- Duration of new accreditations led by the manager and certificates of the accreditation agencies: three years
- Five or more years: Mandatory retention period of the accreditation records depending on the date investor exits the scheme.
Eligible securities exposure is comprised of demat listed and unlisted securities, mutual fund holdings, overseas securities investments and National Pension System investments.
Eligibility may be determined by means of income tax returns, audited financial statements, electronic consolidated account statements or certificates from practising Chartered Accountants, depending on the criteria used.
What will the changes mean for investors in AIF, SIF and PMS?
The new framework is intended to address procedural delays in the accreditation of investors.
Participating investment managers will be able to verify eligible investors themselves instead of having to go through an accreditation agency separately.
The manager determines the accreditation for three years.
If the investor is accredited at the time of joining a scheme, the investor will continue to be treated as accredited for the rest of the life of that scheme even if the original period of accreditation expires.
SEBI has also clarified that Persons Resident Outside India are deemed to be Accredited Investors without the requirement of separate accreditation though other regulatory due diligence requirements continue.
Limited Liability Partnerships can qualify where each partner satisfies the relevant eligibility conditions on their own.
What Protections are Still in Place?
Investment managers seeking accreditation must maintain supporting documentation and conduct internal compliance reviews on a periodic basis.
They also need to create policies to handle conflicts of interest, investor complaints, data privacy and cybersecurity.
The accreditation function must be kept separate from business development and distribution activities.
An investment adviser or research analyst may rely on a valid determination of a manager within its corporate group, but may not make an independent determination of accredited status.
The changes do not remove the underlying criteria for financial eligibility or the risks associated with sophisticated investment products.
The revised rules came into effect on 5 November 2026. The primary effect is administrative: eligible investors face a lighter verification process, while investment managers assume a greater burden of checking and documenting accreditation.
