SEBI’s New Accredited Investor Proposal: Has SEBI Finally Fixed the AI Bottleneck?
SEBI’s latest Consultation Paper on the Review of the Accredited Investor (AI) Framework could significantly change how Accredited Investors are identified and onboarded in India.
And, frankly, the biggest change is not just about thresholds.
It is about who gets to decide whether an investor is an Accredited Investor.
Under the existing framework, an investor generally approaches an independent Accreditation Agency, gets their financial eligibility verified, obtains an Accreditation Certificate, and then approaches the relevant fund manager or intermediary.
SEBI is now proposing a much more streamlined approach.
The Big Change: Fund Managers May Be Able to Accredit Investors
SEBI has proposed allowing the Manager of an investment product to determine and record an investor’s Accredited Investor status as part of the onboarding process.
In other words, the investor may no longer need to separately complete the accreditation journey with an Accreditation Agency before approaching the fund manager.
For the same manager or group, the proposed accreditation could remain valid for three years.
For products offered by different managers, accreditation would be undertaken when the investor is onboarded by each manager.
This is a fairly fundamental shift.
The existing framework was deliberately built around independent verification, precisely because Accredited Investor status can unlock regulatory flexibilities. SEBI itself acknowledges that allowing the Manager to determine AI status creates potential conflicts of interest and therefore proposes safeguards such as record keeping, audit, accountability and conflict-of-interest policies.
Importantly, SEBI is not proposing to eliminate the Accreditation Agency route.
The existing route would continue alongside the proposed Manager-led route, giving investors a choice between portability and convenience.
But Here Is the More Interesting Question: Who Actually Becomes an Angel Investor?
This is where the conversation gets interesting.
The existing AI framework has relatively high financial eligibility thresholds.
For an individual/HUF/family trust/sole proprietorship, the current criteria include:
Annual income of at least ₹2 crore, OR
Net worth of at least ₹7.5 crore, including at least ₹3.75 crore in financial assets, OR
Annual income of at least ₹1 crore and net worth of at least ₹5 crore, including at least ₹2.5 crore in financial assets.
For many aspiring angel investors, these are substantial thresholds.
So while simplifying the accreditation process is useful, simplification does not automatically mean democratisation.
SEBI appears to recognise this issue.
The consultation paper notes that the Accredited Investor population was only 3,820 as of July 31, 2026, although this had increased sharply from 649 a year earlier.
That is still a tiny pool compared with the potential universe of investors in India.
The Potential Game Changer: Securities Market Assets
SEBI has proposed a new eligibility route based purely on securities market assets.
Under the proposal:
Individual investor: ₹5 crore or more of securities market assets
Body corporate: ₹20 crore or more of securities market assets.
The assets considered include securities such as equity, debt, REITs/InvITs, AIF units, mutual funds, certain futures positions, unlisted securities held in demat form and overseas securities market investments.
The logic is interesting.
Instead of asking an investor to repeatedly produce extensive financial documentation, securities-market holdings can potentially be verified digitally through e-CAS and broker statements.
That could make accreditation substantially more efficient.
SEBI’s Own Data Shows Why This Matters
SEBI estimates that, based on the proposed ₹5 crore securities-market-assets threshold, approximately 3.7 lakh investors could potentially become eligible for accreditation.
That compares with approximately 96,000 existing AIF investors.
That is a potentially enormous expansion of the Accredited Investor universe.
And this is where the proposal becomes much more interesting for the AIF ecosystem.
More eligible investors → more potential AIF investors → potentially more risk capital.
But there is an important caveat:
Eligible does not mean active.
Having ₹5 crore in securities does not automatically mean someone wants to become an angel investor, invest in private companies, or take venture-style risk.
The proposal may therefore solve a regulatory access problem, but it does not by itself solve the investor participation problem.
So Has SEBI “Fixed” Accredited Investor Accreditation?
Not yet.
But SEBI has clearly identified the friction points.
The consultation paper specifically records industry concerns around:
duplication between Accreditation Agencies and fund managers;
limited validity;
limited number of Accreditation Agencies;
high accreditation costs;
reliance on financial documentation;
digital verification of financial information; and
expanding the universe of eligible investors.
The proposed framework directly attacks several of these issues.
The direction is clear:
Less paperwork.
More digital verification.
Manager-led onboarding.
Longer validity.
A potentially much larger AI universe.
What Could This Mean for AIF Managers?
If the proposal is eventually implemented broadly along these lines, Accredited Investor onboarding could become much closer to a normal digital KYC/onboarding workflow.
Instead of:
Investor → Accreditation Agency → Verification → Accreditation Certificate → Fund Manager → Verification Again → Investment
the proposed Manager-led model could look more like:
Investor → Fund Manager → Eligibility Verification → AI Status → Investment
with appropriate records, controls, audit and accountability.
That is a significant operational change.
And it creates an interesting opportunity for the industry:
Accreditation could increasingly become an embedded part of the investment onboarding infrastructure rather than a separate administrative process.
But There Is Still a Big Question
The central question is not whether the process becomes easier.
It is:
How far should India lower the friction around access to sophisticated investment products without lowering the standard for investor sophistication?
SEBI’s own consultation paper highlights this tension.
The AI framework exists because Accredited Investors receive access to products and regulatory flexibilities that may involve greater complexity, lower liquidity or reduced regulatory oversight.
So the challenge is to make accreditation easy enough to use, but credible enough to mean something.
That balance will determine whether the new framework actually works.
Our View
SEBI’s proposal is directionally positive.
The Manager-led accreditation model could remove a major operational bottleneck.
The ₹5 crore securities-market-assets route could dramatically expand the eligible investor universe.
And digital verification could make the entire process faster, cheaper and more scalable.
But if the objective is to genuinely deepen India’s angel and private-market ecosystem, accreditation reform is only one piece of the puzzle.
The next question is much bigger:
Can India create a framework where a much larger pool of financially sophisticated investors can participate in AIFs, angel investing and private markets — without compromising investor protection?
That is the real test of this consultation.
One Important Caveat
This is currently a SEBI consultation paper, not the final regulatory framework.
SEBI has invited public comments on Proposals 1–10 until September 3, 2026. The final regulations may therefore differ from the proposals discussed above.