New Delhi, Oct. 14 -- The Securities and Exchange Board of India's new qualifying criteria for accredited investors will exponentially increase the number of these investors for private equity, venture capital and other alternative investment funds, a senior official at the regulatory body said.
"As of now, the number of total investors [in alternative investment funds] is approximately one lakh, and this one measure itself will take the accredited investor number to four lakh, four times from the existing number [of all the AIF investors]," said wholetime member Sandip Pradhan. That would also be a marked increase from the existing number of accredited investors, which was 3,820 as of July 31, 2026.
"So that's a sea change that we are going to see in the time to come," he said, speaking at the CII Alternative Investment Fund Summit.
On September 24, SEBI's Board had approved various proposals to make accreditation of investors easier. One of them was to introduce securities' market exposure--of a minimum of Rs 5 crore--as a qualifying criteria for this category of investors. Until then, the qualifying criteria was networth which included a significant portion held in financial assets (of Rs 7.5 crore for individuals with atleast Rs 3.75 crore in financial assets).
This is the change that Pradhan was referring to.
In the same meeting, the Board also approved other proposals such as allowing fund managers to accredit investors and allowing deemed accreditation status for non-residents.
All of these changes are yet to be notified.
Pradhan added that SEBI will "very soon" be coming out with a circular on this.
SEBI's accreditation push
SEBI has been moving towards an accredited investor-only framework for AIFs, and started with mandating this requirement for angel funds. The regulator has been pushing for this considering the high-risk nature of these investments and for allowing sophisticated investors to participate in them with lesser compliance requirements.
In his speech at the CII event, Pradhan acknowledged that startups needed risk capital and expertise which angel investors provided, even while he noted that these investments came with uncertain returns, limited liquidity, uncertain valuation and long gestation period.
"It is in this context that the framework has moved towards participation by accredited investors in angel funds. In a nutshell, we are certainly moving towards more and more accredited investors, and those will be allowed to invest freely without any lower restriction of one crore in the AIF, as all of you are already aware," he said. The minimum investment in any AIF is Rs 1 crore but this threshold is not applicable to accredited investors.
Pradhan also outlined three broad themes emerging as important for the regulator. One is enabling differentiated regulation to different categories of investors; secondly, better data and risk-based supervision; and finally, stronger governance within industry, committees, compliance officers, trustees and senior management.
Also read: PE, VC industry making informal network to help angel funds meet accreditation deadline
Published by HT Digital Content Services with permission from VC Circle.