SEBI Seeks to Open AIFs to More Investors with New ₹25 Crore Entry Norm

The Securities and Exchange Board of India (SEBI) has proposed significant regulatory relaxations for Large Value Funds (LVFs) under the Alternative Investment Funds (AIF) framework. In its recently released consultation paper, the regulator proposes reducing the minimum investment threshold for LVFs from ₹70 crore to ₹25 crore.

Proposed Cut in LVF Entry Threshold

The move aims to open up these funds to a broader class of domestic institutional investors—such as insurance companies—that currently face internal exposure limits and find the ₹70-crore threshold too steep. SEBI emphasised that this lower threshold would help diversify the investor base and enhance participation while maintaining investor sophistication.

Easing Compliance for Accredited Investor Schemes

A suite of compliance relaxations is also on the table. SEBI proposes to exempt LVFs from the mandatory use of the standard Private Placement Memorandum (PPM) template, annual audits of PPM terms, and the usual fiduciary responsibilities placed on investment committee members. Additionally, schemes that exclusively serve accredited investors could be exempt from NISM certification requirements for key investment team members.

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Other Key Regulatory Changes Under Consideration

Another notable proposal is the elimination of the 1,000-investor cap per AIF scheme. SEBI reasons that, given the large ticket sizes and the requirement that LVF investors be accredited, this cap is no longer essential.

Furthermore, SEBI has suggested allowing existing AIF schemes—whose investors already meet the LVF criteria—to convert into LVFs, subject to unanimous consent from investors. This would enable them to take advantage of the proposed relaxations.

SEBI highlighted that since the LVF category was launched in August 2021, traction has been steady. As of June 30, 2025, there are 62 LVF schemes with commitments exceeding ₹1.34 lakh crore, and these schemes have made investments totalling nearly ₹60,000 crore. The regulator believes that lowering the entry bar could further channel long-term capital, especially into unlisted securities.

SEBI will accept public feedback on these proposals until August 29, 2025.

Conclusion

SEBI’s proposed changes mark a thoughtful recalibration of the AIF framework. Reducing investment thresholds and relaxing compliance norms signal its intent to strike a balance between accessibility and investor protection. If adopted, these reforms could notably broaden participation in LVFs and deepen capital flows into growth assets.