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In India, CDSL Ventures Ltd (CVL) is granted recognition by Sebi to act as an accreditation agency for investors. The person will have to carry out the accreditation process on his own, visit the CVL portal, and submit proof of identity, such as PAN, Aadhaar card or passport. They also need to submit copies of IT returns and net worth certificates from a practising CA.
It takes three business days for an investor to get the certificate of accreditation. The certificate is provided for two or three years depending on the documents furnished. There is a fee to get the certificate, which is 12,000 for two years.
The industry body for AIFs, Indian Venture and Alternate Capital Association (IVCA) has asked the Securities and Exchange Board of India (Sebi) to allow AIF fund managers to carry out the accreditation process. This is because AIF fund managers do the KYC process for all customers before onboarding them on their fund. Another suggestion is to validate the net worth from the income tax department.
“We can validate the investor’s net worth and income on the basis of PAN as these details are filed with the IT department for taxpayers who are investors in AIFs," said Siddharth Pai, executive member of IVCA. The process of accreditation in India is a cumbersome one. In certain countries, investors only need to give a self-declaration to get accredited.
In others, the onus is on fund managers to collect the information to determine whether an individual can be considered an accredited investor, said Bhautik Ambani, CEO of Alphagrep Investment Managers. Accredited investors can take higher risks and hence allowed to invest in Portfolio Management Services (PMS) and AIFs at a threshold lower than the minimum required amount of 50 lakh and 1 crore respectively. Sebi has been talking about increasing the number of accredited investors to provide light-touch regulations for AIFs.
Its whole-time member Ananth Narayan says the clamour for an accredited investor regime comes from the industry, not the investors. The number of accredited investors is around 200, say stakeholders. Some investors don’t find accreditation necessary, as the primary benefit is a lower entry ticket size for PMS, or AIF.
“We don’t push for accreditation as many of our clients, high net-worth individuals and family offices, typically invest over 1 crore, making accreditation less relevant for them," said Sachin Shah, executive director at Emkay Investment Managers. Also, along with the cumbersome process there is a cost involved..
