The Securities and Exchange Board of India (Sebi) is facing a significant challenge in its efforts to expand the country's base of accredited investors. Despite a large pool of potential candidates, the official count of these sophisticated investors remains surprisingly low, raising questions about the effectiveness of recent regulatory changes.
A Staggering Gap in Investor Numbers
Recent data from Sebi's board meeting documents reveals a stark contrast. While India boasts more than 72,000 unique investors in Alternative Investment Funds (AIFs), the number of formally registered accredited investors (AIs) was a mere 649 as of May 2025. This figure had grown only marginally from the 649 reported in Sebi's June meeting documents, indicating a registration process that is progressing at a glacial pace.
The market regulator has attributed this low count to two primary factors. First, recent relaxations in the rules may have reduced the immediate urgency for registration. Second, the existence of deemed accredited investors—entities that qualify based on their financial status but have not formally registered—means their participation is not captured in the official accreditation data.
What Does It Take to Become an Accredited Investor?
Established in 2021, Sebi's criteria for accredited investor status are stringent. For individuals, family trusts, sole proprietorships, or partnerships, the requirements include an annual income of at least ₹2 crore or a net worth of ₹7.5 crore, with a minimum of ₹3.75 crore held in financial assets. Corporate bodies and non-family trusts need a net worth of ₹50 crore to qualify.
The key advantage for an accredited investor is the removal of the minimum investment limit of ₹1 crore that typically applies to AIFs. This allows AIs to diversify their risk by allocating smaller amounts across various high-risk, high-return schemes.
Sebi's New Push and Industry's Mixed Response
In a significant move on 19 November 2025, Sebi notified amendments aimed specifically at boosting the AI segment. The new norms allow AIFs to launch funds or schemes exclusively for accredited investors. Existing AIFs can also convert into accredited-only schemes. Furthermore, the cap of 1,000 investors in an AIF has been removed for these specialized funds, and trustee responsibilities can be shifted to the fund manager.
However, the industry remains divided on the potential impact of these reforms.
Pessimistic Viewpoint: Some executives argue that the core issue is a lack of compelling products. Ranjit Jha, MD & CEO of Rurash Financials, stated, Accredited investors are not offered a lot in India. Because India is yet to become a developed economy, we lack exclusive investment opportunities for them. This sentiment is echoed by an anonymous AMC executive who pointed out that the lack of a minimum investment limit is not viewed favorably by all AIFs, as it could potentially affect fund inflows.
Optimistic Viewpoint: Others see a brighter future. Rohit Gulati, CEO of UTI Alternatives, believes awareness was a previous hurdle that is now being overcome. We are expecting accredited investor figures to pick up, he said, adding that AIFs will be keen to launch exclusive funds once a critical mass of AIs is achieved.
Sidharth Pai, founding partner at 3one4 Capital, provided a measured perspective, noting that AIFs will eventually become an accredited investor-only product, but the path requires frictionless coordination between Sebi, the AIF industry, and investors.
The Road Ahead for India's Accredited Investors
For the accredited investor framework to truly take off, experts believe more needs to be done. Asif Iqbal Khan, General Counsel at Vivriti Asset Management, highlighted the role of technology in improving investor outreach and the efficiency gains from removing the 1,000-investor cap. He also anticipates future relaxations, such as in private placement norms for AI-only funds.
The current landscape in India differs sharply from developed markets like the US, where accredited investors have access to a wide array of exclusive products like private equity and hedge funds, often employing leverage and complex derivatives. Replicating such a mature ecosystem in India is the ultimate goal.
The success of Sebi's initiative hinges on creating a virtuous cycle: more accredited investors will encourage the launch of more exclusive funds, which in turn will make accreditation more attractive. With AIF gross capital raised having crossed ₹6.36 lakh crore by September 2025, the potential is enormous. The coming months will be critical in determining whether the new rules can finally deliver the long-awaited boom in India's accredited investor community.
