Accredited investors: All you need to know about this new category

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Source: Livemint

What is the News?

Securities and Exchange Board of India(SEBI) has come up with a framework for creating so-called accredited investors.

What are Accredited Investors?
  • Accredited Investors are those investors who may be considered to be well-informed or well-advised about investment products.

Eligibility to become Accredited Investor: Anyone is eligible to become an accredited investor provided the person satisfies at least one of three conditions:

  • One, the investor has a net worth of ₹7.5crore, with at least half of it in financial assets.
  • Two, the investor has an annual income greater than ₹2 crores.
  • Three, the individual has an annual income greater than ₹1 crore and net worth greater than ₹5 crores, with at least half this amount in financial assets.

Note: For trusts and body corporates, the net worth threshold is ₹50 crore.

Benefits of becoming an accredited investor:
  • Accredited investors get relaxation in the minimum amount to be invested in the Alternative Investment Funds(AIF) Regulations and Portfolio Managers(PMS) Regulations.
  • Investment advisory fees can be set mutually without any regulatory caps.
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