The request to ease up on investor protection for accredited investors investing in alternative investment funds (AIFs) comes as a strong request from the industry—managers and ecosystem—not from investors, said Ananth Narayan, whole-time director of the Securities and Exchange Board of India (Sebi).
He said that Sebi is yet to come across investors who say "go easy on regulations." Narayan was speaking at the Confederation of Indian Industry (CII) event.
On the contrary, he said that even QIP investors, ask us to maintain the regulations where they are currently.
Another issue he highlighted was higher costs for accredited investors. Narayan said that one of the reasons the cost is high is because there are the number of accredited investors is low. "Once you have a reasonable number of investors coming in, the cost will automatically come down," Narayan added.
Talking about the challenges, he said that the preamble to the SEBI Act starts with the first goal of SEBI being investor protection. And asking the regulator to dilute investor protection is not a part of its DNA.
Narayan said that the industry should move to the accredited investors regime very soon. He added that the intermediaries should look at the process of accredited investors applications which will help down in bringing down the costs.
He also said that one of the challenges with light-touch regulatory framework is funds being structured in a way to circumvent existing financial sector regulations.
He added that of the Rs 4.5 lakh crore of investment, around Rs 1 lakh crore of investment has been questionable in terms of the regulatory intent.
"We’ve seen, IBC, SARFAESI, FEMA, related laws being circumvented," Narayan added.
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