The myths and realities of being an Accredited Investor

A larger base of accredited investors will deepen participation in alternative asset classes

By Srikanth Subramanian

SEBI’s latest consultation paper on co-investment vehicles (CIVs) signals more than just regulatory housekeeping, it marks a strategic pivot in how India’s alternative investment landscape is being reshaped for sophisticated investors.

By enabling Alternative Investment Fund (AIF) managers to launch bespoke, deal-specific “funds-of-one,” CIVs resolve long-standing structural frictions around co-investments, simplifying execution, preserving cap-table integrity, and aligning exit strategies.

But the real shift lies in who gets access: only Accredited Investors (AIs) will be eligible. By linking co-investment privileges to the accreditation, the Securities and Exchange Board of India (SEBI) prompts a deeper question: why does the markets regulator provide these high-quality opportunities to only a segment of affluent investors? Is it a move to ensure that more affluent investors take up the accreditation? And importantly, as this HNI (high net-worth individual) class expands, what kind of growth potential does it unlock? Not just for private capital markets, but for the broader economy?

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Accredited Investor Framework: a game-changing move

SEBI’s AI framework, introduced in 2021, is redefining access by lowering entry barriers for high-value AIFs (Alternative Investment Funds), PMSes (portfolio management services), and GIFT City structures. It is a gateway that balances investor protection with wider market access, much like the `Qualified Investor' or `Accredited Investor' definitions in mature economies like the US, UK, and Singapore. By setting clear accreditation criteria based on income and net worth, SEBI has adopted a globally recognised approach to enrich financially savvy investors and aligned India’s regulatory standards with those of developed markets.

A larger base of AIs will deepen participation in alternative asset classes such as private equity, venture capital funds, and structured products. The framework also drives product innovation, encouraging distributors to tailor offerings by setting customised thresholds aligned with the financial sophistication of accredited investors.

Here are some myths currently keeping investors on the fence when it comes to pursuing accreditation:

Myth 1: AI is only for large promoters and institutions

Reality: accreditation is also for individuals who meet specific criteria:

Individuals, Hindu Undivided Families (HUFs), Family Trusts, and Sole Proprietorships qualify on meeting one of these three eligibility criteria:

Income criteria - Annual income of ₹2 crore or more.

Net worth criteria - minimum ₹7.5 crore, with at least ₹3.75 crore in financial assets.

Combined criteria - Annual income of ₹1 crore and net worth of ₹5 crore of which ₹2.5 crore should be in financial assets.

Primary Residence Exclusion - For individuals, HUFs and sole proprietorships, the value of their primary residence is excluded from the net worth calculation.

Joint Application - If joint holders are spouses, their combined income and/or net worth must meet the AI criteria. If joint holders are parents and children, at least one must independently fulfil the AI criteria.

Foreign Investors - The eligibility of foreign investors is determined based on the rupee equivalent of their income and/or net worth as applicable to Indian regulations.

Myth 2: the AI framework is just a fancy label, the offerings remain unchanged

Reality: far from it. The framework is designed with an investor-first approach. Previously not allowed by regulation, this enables investors to receive advice on their existing portfolios and gives them access to differentiated investment opportunities at lower entry thresholds.

Myth 3: becoming an AI is tedious, expensive, and requires extensive assistance.

Reality: with all the paperwork in place, investors can secure accreditation in just two–three business days, at a cost of ₹10,000* plus taxes – all from the comfort of their homes.

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(*applicable to individuals, HUFs, and sole proprietorships).

Myth 4: accreditation brings limited change, as the investment thresholds continue to remain high

Reality: accreditation creates a regulatory-light environment for sophisticated investors, relaxing the requirement of a high minimum investment. Thus, PMSs are now available for as little as ₹10 lakh (versus ₹50 lakh earlier), AIFs at ₹25–50 lakh (versus ₹1 crore) and GIFT City tech funds at $10,000 (versus $150,000).

Myth 5: Once accredited, investors are required to opt for both advisory and distribution services

Reality: investors can opt for advisory, distribution, or a mix of both, there’s no one-size-fits-all approach.

Myth 6: accreditation is strictly for an individual, requiring each spouse to qualify separately

Reality: not necessarily. Investors can opt for joint accreditation, with eligibility criteria applied to the investor and the spouse's combined financials.

Myth 7: foreign investors cannot be AIs

Reality: foreign individuals and entities are eligible if their Rupee-equivalent income or net worth meets the defined thresholds. However, accreditation is valid only for investments regulated by SEBI, and not in foreign jurisdictions.

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The AI framework is not just a regulatory formality, it is a game-changing shift in how we define investor maturity and empowerment. As capital markets evolve and investor expectations grow, frameworks like these will be central to widening access to high conviction ideas – from greenfield projects to cutting-edge technologies – and serve as a crucial bridge between capital and innovation.

It reflects India’s readiness to let its financially savvy cohort play a more autonomous role in their wealth creation, while aligning with global best practices. But one must move past the misconceptions and embrace the facts to truly benefit from the accreditation and be a part of the nation's growth journey.

The author is CEO and Co-founder of Ionic Wealth