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SEBI has relaxed norms to become accredited investors. In a circular, SEBI said that individuals having annual income of Rs.2 crore can become accredited investors.
Among other criteria to become an accredited investor are net worth of Rs.7.50 crore of which Rs.3.75 crore has to be in financial assets and annual income of Rs.1 crore along with net worth of Rs.5 crore of which Rs.2.50 crore should be financial assets.
SEBI said individuals, HUFs, family trusts, sole proprietorships, partnership firms, trusts and corporates can become accredited investors.
Accredited investors are those investors who 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.
As a result, they can have dedicated financial products and fee structure. Also, SEBI allows AIFs and PMSs to offer their products with low ticket size.
Overall, the move opens doors for financial service providers to introduce customised investment products for sophisticated clients.
Further, investors who want to qualify as accredited investors will have to get a license from accreditation agencies, which is BSE Administration and Supervision Limited (BASL) and KYC Registration Agencies (KRAs).
These agencies will grant license based on KYC and financial information of the applicant. Such agencies can grant license for up to 3 years if applicant meets all criteria in each of the preceding two years. If she meets such a criteria for preceding one FY then license will be granted for 2 years.
For new applicant without any financial information in the preceding financial year but meets net worth or income criteria, the agency will grant license for two years.
If accredited investor surrenders his license, he will have to comply with existing SEBI norms applicable to regular investors like higher ticket size to invest in PMS and AIF.
