Industry chamber CII has asked market regulator Sebi to relax the proposed floor for HNI investment in Alternative Investment Funds (AIFs), asserting that the lower limit of Rs 1 crore would discourage them from participating in the scheme.
"In the proposed AIF regulations, the definition of HNIs is linked to a minimum investment of Rs 1 crore. Such a high minimum investment amount may prove to be a deterrent for HNIs seeking to participate across different AIFs from a risk diversification standpoint," CII said in a statement.
Last month, market regulator Sebi proposed new rules for Alternative Investment Funds, which generally involve investment in art works, antiques, coins and stamps, as well as a host of other instruments, besides popular avenues like stocks, commodities and derivatives.
Sebi's proposed new rules were intended to regulate private pools of capital where institutions or HNIs invest as AIFs. The market regulator has sought public comments on the guidelines.
Sebi, however, suggested keeping retail investors out of the ambit of the AIF guidelines.
CII said Sebi must prescribe eligibility criteria for 'accredited investors' and only such qualified investors should be allowed to invest in AIFs.
The CII has also recommended that appropriate guidelines should be introduced for regulation of distributors that market AIF products to prospective investors.
Sebi has also proposed that AIF investors should be locked into the fund for a minimum period of three years. However, the CII suggested, "A lock-in would be restrictive of the AIFs' operational abilities and accordingly, may be deleted."