Low take-up has limited the accredited investor regime in India. Analyse the reasons and assess SEBI's recent reforms.

Accredited Investors (AIs) are investors certified as financially sophisticated on the basis of income, net worth or assets, under Regulation 2(ab) of the SEBI (AIF) Regulations [2]. SEBI introduced the framework in 2021 [3], but in June 2025 its own board paper counted fewer than 1,000 registered AIs against about 72,000 unique AIF investors [1]. Many investors are eligible, but few have used the regime.

Reasons for Low Take-up

• High wealth-only thresholds: an individual needs ₹2 crore annual income or ₹7.5 crore net worth. The primary residence is excluded, and the test must be met in each of the three preceding years [2].
• Procedural friction: a separate accreditation agency must verify each applicant, and the certificate lasts only two years. This adds paperwork and cost [2].
• Weak incentive: the ₹1 crore ticket-size route, set in 2012, already lets HNIs invest in AIFs without accreditation [1].
• Few exclusive benefits: the ₹70 crore minimum for Large Value Funds (LVFs) put the main relaxation out of reach of most individuals [1].

Assessment of Recent Reforms

Strengths

• AI-only schemes with lighter compliance, and a proposal to cut the LVF threshold to ₹25 crore. Both make accreditation more worthwhile [1].
• Phased shift from ticket size to accreditation: SEBI found that the ticket-size test can push investors to put most of their wealth into AIFs. Accreditation is a better test of whether an investor can bear losses [1].
• Wider eligibility: the August 2026 consultation paper proposes a new route for individuals with ₹5 crore and companies with ₹20 crore in securities, with eCAS accepted as proof. SEBI expects this to widen the eligible pool to about 4 lakh [4]. SEBI says a circular is due soon [6].

Concerns

• Wealth is not expertise: 8 of 20 commenters opposed making accreditation the only test, and some asked for a knowledge-based route [1].
• Weaker safeguards: AI-only schemes may waive pari-passu rights, extend fund life by up to five years and shift trustee duties to managers [1]. These relaxations would apply just as the pool could quadruple.
• Risk of AIFs being used to bypass other rules: RBI barred banks and NBFCs from AIF schemes with downstream investments in their own debtor companies, to curb evergreening [5].

Low take-up comes from high bars, procedural friction and weak incentives, and SEBI's reforms rightly make accreditation easier and more rewarding. SEBI should expand in the phased manner it has itself committed to [1], add a knowledge-based route to accreditation and set independence norms for trustees. That way, more domestic risk capital can reach start-ups while SEBI still meets its statutory duty to protect investors.