NASSCOM’s Recommendations on SEBI’s Consultation Paper on Introduction of Concept of “Accredited Investors” in Indian Securities Market

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NASSCOM’s Recommendations on SEBI’s Consultation Paper on Introduction of Concept of “Accredited Investors” in Indian Securities Market

Garima Prakash

@GarimaP

March 22, 2021

Public Policy

On 18 March 2021, NASSCOM provided its suggestions to Securities and Exchange Board of India (SEBI) on their Consultation Paper on Introduction of Concept of “Accredited Investors” in Indian Securities Market.

We appreciate that SEBI is taking this positive step towards introducing the concept of Accredited Investors (AI) in India. At the outset, the proposed elements in the Consultation Paper appear to be rational, and the following suggestions may help in making the AI regime more beneficial.

1. Allowing Non-Resident Indians (NRI) that are investing using their Non-Resident Ordinary (NRO) accounts in India, to be treated as Indian residents for the purpose of eligibility criteria for becoming an AI. This is because the income saved in an NRO account is earned in India and is to be invested in India, and therefore, there is no reason for an NRI suing NRO account to not be treated as an Indian resident for investment purposes.

2. Assessing the income and asset details for eligibility criteria on the basis of data furnished in the Income Tax Returns filed for three immediately preceding financial years, instead of one year only. We understand that assessing the eligibility based on only one year of income tax returns may not be sufficient because it may not showcase the full-picture about an individual’s finances. Therefore, a timeline of three years should be followed as a manner of establishing a track record.

3. Validity of accreditation once granted, should remain for three years from the date of accreditation, rather than one year. This is because (a) renewing AI certification every year may deter investors if it is a time-consuming process; (b) certain transactions may take over a year to complete and the invalidity of AI certification at any time during such transaction may raise questions in relation to the compliance to be undertaken by such AI.

Please find our submission as attached. For more information, please write to garima@nasscom.in and tejasvi@nasscom.in.

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Garima Prakash

Manager, Public Policy and Government Affairs

Reach out to me for all things policy about e-commerce, international trade, export controls, start-ups and fintech