Consultation Paper on introduction of the concept of Accredited Investors

Last updated: 27 February 2021

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The Securities and Exchange Board of India (SEBI) is seeking public feedback on a proposal to introduce the concept of 'Accredited Investors' (AIs) into the Indian securities market. This initiative aims to recognise investors with a strong understanding of financial products and the capacity to absorb risk, potentially offering them access to a wider range of investment opportunities with a more flexible regulatory framework. The consultation paper outlines proposed eligibility criteria for individuals, trusts, and corporate bodies, along with the process for accreditation and how this concept could be applied across various financial products and services.

Securities and Exchange Board of India Consultation Paper on Introduction of concept of Accredited Investors in Indian securities market 1.Objective: 1.1. The objective of this consultation paper is to seek comments from the public and various stakeholders of the securities market, on the proposal to introduce the concept of Accredited Investors in the Indian securities market. 2.Background: 2.1. The concept of a class of investors who have an understanding of various financial pr

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FAQ :

The main objective is to gather comments from the public and stakeholders on the proposal to introduce the concept of 'Accredited Investors' in the Indian securities market.

Globally, Accredited Investors (or similar terms like Qualified or Professional Investors) are recognised as investors who possess an understanding of financial products and their associated risks, and are capable of making informed investment decisions, often due to their financial capacity or knowledge.

For resident Indian individuals, proposed criteria include an annual income of INR 2 Crore or more, OR a net worth of INR 7.5 Crore or more (with at least INR 3.75 Crore in financial assets), OR an annual income of INR 1 Crore plus a net worth of INR 5 Crore (with at least INR 2.5 Crore in financial assets).

Accreditation will be carried out by 'Accreditation Agencies', likely Stock Exchanges and Depositories or their subsidiaries. Investors will submit necessary documents to these agencies to ascertain eligibility, and if approved, will receive a certificate valid for one year.

Benefits include portfolio diversification for investors through access to customised products and lower entry barriers, reduced compliance costs and faster time-to-market for issuers, and a lighter regulatory framework for products aimed at AIs, allowing for better resource allocation for retail investor protection.

Comments on the proposal should be sent to aiconsultation@sebi.gov.in and must reach SEBI by March 18, 2021.

Notification No : Dated : Feb 24, 2021
Source : https://www.sebi.gov.in/reports-and-statistics/reports/feb-2021/consultation-paper-on-introduction-of-the-concept-of-accredited-investors_49269.html

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