Sebi mulls review of accredited investors framework, says they don't need same protection as Rs 250 SIP investors

Ananth Narayan, whole-time director, SEBI

Accredited investors do not necessarily need to have the same level of investor protection like that of a Rs 250 SIP investor, said Ananth Narayan, whole-time member of the Securities and Exchange Board of India.

In an event in Mumbai, Narayan added that risk-aware and financially stable people could be allowed to take risk without the regulator worrying too much about investor protection.

SEBI is trying to expand the accredited investor regime and any further changes will come through a a consultation paper, Narayan said on the sidelines of the event.

He added that if India has to create the next DeepSeek, a lot of money should flow into startups, particularly greenfield projects and fresh startups.

“Allowing accredited investors to fund high-growth startups might be a way to ensure that we join the global ecosystem in leading the change rather than following the change,” he added.

It has been nearly four years since SEBI introduced the category of accredited investors, but till date only around 200 entities have opted for registration in the category.

Moneycontrol had earlier reported that this to a combination of factors including lack of awareness, lengthy approvals and the reluctance among individuals especially from the HNI and business owner background to disclose their key financial information.

Narayan also added that India needs a thriving ecosystem of investment advisors. India currently has only about 1,000 investment advisors, a number that is way less than the around 2 lakh mutual fund distributors, who are paid by the producers, Narayan added. “Investment advisors are the ones who get paid by you, not by the producer and their interests are aligned to yours,” he added.

Narayan also added that mutual funds may be right but they’re also subject to market risk. “One cannot be included in financial inclusion if they’re not completely aware of the risks,” he added. He said that SEBI is there for investor protection but it cannot protect it from market volatility.

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