Sebi proposes widening accreditation scope for KRAs, allows AIFs to provisionally onboard traders, public consultation sought till July 8

The Securities and Exchange Board of India (Sebi) on Wednesday proposed two key regulatory reforms geared toward increasing the investor accreditation framework and accelerating onboarding processes for Alternative Investment Funds (AIFs). The regulator has invited public suggestions on these proposals by July 8.Under the recommended modifications, all KYC Registration Agencies (KRAs) would change into eligible to operate as accreditation companies, reversing the present restriction that limits the function to subsidiaries of inventory exchanges and depositories, PTI reported.Sebi famous that solely two accreditation companies—CDSL Ventures Ltd and NSDL Data Management Ltd—are at present operational, each of that are KRAs. Expanding eligibility (*8*) and will carry in additional gamers, boosting competitors and lowering prices, the market watchdog stated in its consultation paper.The regulator identified that 5 KRAs are already registered, and broadening their function would inject effectivity and selection into the accreditation course of.The proposal additionally empowers AIF managers to provisionally onboard traders as accredited shoppers, based mostly on first-level due diligence, topic to issuance of a proper accreditation certificates.To guarantee compliance, Sebi stipulated that funding funds can’t be accepted from these provisionally onboarded traders till a legitimate accreditation certificates is obtained. Additionally, any capital dedication made earlier than certification is not going to depend in the direction of the scheme corpus.For close-ended AIF schemes, the paper mandates that if accreditation shouldn’t be secured earlier than the ultimate shut, AIFs should void the contribution settlement and never settle for any funds from the investor.Currently, the onboarding course of requires traders to receive a certificates earlier than being recognised as accredited, and their capital dedication is just included post-accreditation.