The ₹1 Crore Minimum, Accredited Investors and the Placement Memorandum
SEBI sets a minimum investment of ₹1 crore per investor in an AIF, with a lower figure for the fund's own employees and directors and an exemption for accredited investors. This lesson covers the minimum, who is accredited, and what the placement memorandum contains.
The ₹1 crore minimum
SEBI's AIF Regulations set a minimum investment of ₹1 crore per investor. This is the general rule.
It is the highest of SEBI's three comparable thresholds: the minimum is ₹50 lakh for portfolio management services and ₹10 lakh for a Specialized Investment Fund. There is no ₹5 crore minimum for AIFs. The figure is an entry condition. Meeting it does not reduce the risks of the fund.
The exceptions
Two exceptions apply. Employees and directors of the AIF, or of its manager, may invest a minimum of ₹25 lakh. Accredited investors are exempt from the minimum altogether.
There is also one special case. A much lower minimum, ₹1,000 for individual investors, applies only to a social impact fund that invests solely in non-profit organisations registered or listed on a social stock exchange. It is not a general minimum for social impact funds or for AIFs.
Nothing else lowers the figure. Age, residence or other investments give no exemption.
Who is an accredited investor
An accredited investor is one who holds a certificate of accreditation after meeting SEBI's income or net-worth tests. For an individual, examples of the tests are annual income of at least ₹2 crore, or net worth of at least ₹7.5 crore of which ₹3.75 crore is in financial assets.
Accreditation matters in two ways covered so far: an accredited investor is exempt from the ₹1 crore minimum, and is not counted towards the limit of 1,000 investors in a scheme.
The placement memorandum
An AIF offers its units privately through a placement memorandum. This is the fund's central document. It sets out the fund's strategy, tenure, fees, risk factors and the order in which proceeds are shared between investors and the manager.
Many of an AIF's most important terms are contractual, not fixed by SEBI, so the placement memorandum is where they are found: the fund's actual term, how capital is called from investors, and the distribution waterfall, which the memorandum must illustrate with a worked example.
It is a different document from those of other products. A scheme information document and a key information memorandum belong to mutual fund schemes, and a red herring prospectus to a public issue of securities.
Rules at a glance
Three investors, three thresholds
Three people are offered units of the same Category II AIF through its placement memorandum. Farah is not an accredited investor and has no connection with the fund, so the least she can invest is ₹1 crore.
Dev is a director of the fund's manager. For him the minimum is ₹25 lakh. Kiran holds a certificate of accreditation, having met SEBI's income test, so SEBI's minimum does not apply to her, and she is not counted towards the scheme's limit of 1,000 investors.
All three hold units in the same fund on the terms in the same placement memorandum, and all three bear the same risks: illiquidity, a long tenure, valuation uncertainty and possible loss of capital.
Key points
- The minimum investment in an AIF is ₹1 crore per investor.
- Employees and directors of the AIF or its manager have a ₹25 lakh minimum; accredited investors are exempt from the minimum.
- A much lower minimum (₹1,000 for individual investors) applies only to a social impact fund that invests solely in non-profit organisations registered or listed on a social stock exchange.
- An accredited investor holds a certificate of accreditation after meeting SEBI's income or net-worth tests.
- The placement memorandum sets out the fund's strategy, tenure, fees, risk factors and distribution terms.
Common misunderstandings
- The AIF minimum is not ₹5 crore: it is ₹1 crore per investor.
- The ₹1,000 minimum is not a general rule for social impact funds: it applies only to one that invests solely in non-profit organisations registered or listed on a social stock exchange.
- Meeting the minimum is not a safeguard: it is an entry condition and does not reduce illiquidity, valuation uncertainty or the possibility of losing capital.
Questions people ask
Who can invest less than ₹1 crore in an AIF?
Employees and directors of the AIF or of its manager, for whom the minimum is ₹25 lakh, and accredited investors, who are exempt from the minimum.
Is wealth alone enough to be an accredited investor?
No. An accredited investor holds a certificate of accreditation after meeting SEBI's income or net-worth tests.
What does the placement memorandum tell an investor?
The fund's strategy, tenure, fees, risk factors and the order in which proceeds are shared, with a worked example of the distribution waterfall.
What this lesson relies on
- SEBI (Alternative Investment Funds) Regulations, 2012 (as amended to 14 July 2026)
- SEBI Master Circular for Alternative Investment Funds, 3 June 2026 (as updated)
- SEBI (Portfolio Managers) Regulations, 2020 and SEBI Master Circular for Mutual Funds, Chapter 21 (minimums, for comparison)
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.