MF News Indian wealthy can now have dedicated financial products and fee structure: SEBI

Indian wealthy can now have dedicated financial products and fee structure: SEBI

SEBI has come out with final regulation on accredited investors in which it has allowed investors with annual income of Rs.2 crore to become accredited investors.

Abhishek Kumar Aug 27, 2021

Indian wealthy investors can now become accredited investors to get access to dedicated financial products with no minimum ticket size in AIFs and PMSs and negotiate terms and conditions on fees and services from AMCs and RIAs.

In final regulations on accredited investors, SEBI has allowed investors having annual income or Rs.2 crore or net worth of Rs.7.50 crore including Rs.3.75 crore in financial assets to become accredited investors.

In addition, an investor with annual income of more than Rs 1 crore and net worth of at least Rs 5 crore (including a minimum of Rs 2.5 crore financial assets) is also eligible to become accredited investor.

Accredited investors are those investors who are assumed to have a better understanding of risks and returns associated with financial products. These investors have a higher financial capacity and a greater ability to absorb loss.

In case of partnership firms, each partner will have to meet the criteria. Trusts and body corporates with over Rs 50 crore assets are also eligible for the tag.

Investors who fulfil the criteria will have to approach 'Accreditation Agencies' for accreditation. The agency will issue the certificate after verification.

The accreditation will be valid for one year. After getting accredited for three continuous years, investors will get the option to apply for 2-year licence.

Flexibility to withdraw

Accredited investors will have the flexibility to stop availing the benefits of accreditation at any given time. If they choose to do so, they will have to meet the investment conditions set for normal investors. For example, if an investor availed the benefit of lower ticket size, he/she will have to increase the investment to the minimum amount.

Who can become an accreditation agency?

Subsidiaries of stock exchanges and depositories, which have minimum 20 years of presence in Indian securities market can carry out the accreditation process. Subsidiaries of stock exchanges will also have to meet the following criteria:

1. Minimum net worth of Rs 200 crore

2. Presence in nation-wide terminals

3. Should have investor grievance redressal mechanism in place along with investor service centers in at least 20 cities

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8 Comments

vishal Rastogi · 2 years ago `

I think this is not as so defined here in as I know many investors( like Contractors, Parsads, Politicians, & even few businessman) who does not know ABC of risk or portfolio allocation basics but they are having a greater value of investments than assumed here. Secondly, all those investors were Zero while start, only due to some good advice or MFD's they had created such a big value in investing ................... Then why those MFD's are not provided a special privilege & encourage them to precipitate to teach & create more N more investors like this............ Y only investors have that privilege.....?

Akshar Gupta · 2 years ago

Absolutely agree with you Mr.Vishal Rastogi, this is just another way to discourage the MFDs. But this will surely backfire. Sitting in AC Cabins and coming out with such stupid ideas has now become a trend. In short they are comparing wealth with brains. More the wealth, more the brains. It means we have very little brain as of now :(

sachin Thorat · 2 years ago

Yes Vishal you said Right , Its like Direct plan for AIFs or PMS , AS per the definition mentioned for accredited investors , Its just assume to have better knowledge and understanding , Nothing mentioned about any testing parameters for same , and MFDs helping clients to plant seeds , nurture them .. But once it starts giving fruits , all want to forget MFDs contribution or effort . Today industry /Amcs feels like they have grown on their own which is not the fact , Now a days even client feels same as now corona panic has almost ended .. Does mfds wrok for charity ? Every price of commodities when increased is accpeted but People dont like to pay few paisas to Mfds . instead they will put of their Time , efforts and engery doing own things , for saving few paisa as commision . Its said that Increase AUM , what is the assurity after few years that Mfds Commision will not become zero , So whether i have 1 Cr aum or 1000 Cr aum will that matter ?

Abhishek · 2 years ago

When you put an IAS as in charge only new rule making will happen.

Rahul · 2 years ago `

Stop mis-selling insurance as investment... Why is SEBI silent about insurance mis-selling?

Prashant · 2 years ago

This is a classic case of If I drown I will not drown alone. I will take everyone with me. You save your own self rather than being jealous on others just like you. In fact insurance earns less commission to that of mutual funds but still all distributors should conexist and in fact join hands and fight these regulators who are doing everything to benefit only and only companies they are supposed to regulate. Their job is to see to it that these companies don't earn extra profits at the cost of investors where as they are acting as their PR and helping them to maximise their profits. No matter what happens to the investors.

Rahul · 2 years ago `

Really Prashant... You really talking for your benefit or client's benefit.

Its because of agents like you and IRDA people are suffering and being mis-sold insurance as investment with high commissions and lock-in periods often more than 10 years.

Apurba Kumar Sarkar · 2 years ago `

Being a MFD and a MF investor since long it is our duty to educate our clients. If any investor has the ability to learn and invest his money with financial literacy we have no control over him. And we have to secure new clients. Preferably those clients who have plenty of money and no time they may be targeted for our clients. Retention of the existing customers are tough than acquisition of the new customers. It is observed that when a customer is depending on us many a times we loose the contacts and not properly attended to so they leave their old distributors. No customer will leave an existing distributor provided he is satisfied continuously. OK.

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