The proposed framework by the SEBI on an accreditation-based framework for AIFs reflects its broader vision to depart from a ‘minimum commitment’ threshold to ‘only accreditation’ status as a standard for risk assessment of an investor.

The lighter touch approach adopted by the SEBI in regulating the AIF market reflects the proactive attempt to balance the ease of doing business with investor protection.

Per the author, the proposed amendments are designed to reinforce the governance mechanism of AIFs.