SEBI Board Approves Key Reforms on AIFs | FPIs | SIF | InvITs

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SEBI AIF FPI SIF reforms 2026

Press Release No.18/2026, Dated: 23.03.2026

At its meeting held on 23 March 2026, the Securities and Exchange Board of India (SEBI) approved a series of regulatory reforms aimed at improving ease of doing business, strengthening market efficiency, and enhancing regulatory clarity.

1. Measures Relating to Alternative Investment Funds (AIFs)

1.1 Retention of Liquidation Proceeds

SEBI has permitted AIFs to retain liquidation proceeds under specified conditions, providing operational flexibility during fund wind-down and distribution processes.

1.2 Introduction of ‘Inoperative Fund’ Framework

An ‘inoperative fund’ framework has been introduced to address situations where funds are unable to proceed with operations or deployment, ensuring better regulatory handling and compliance clarity.

2. Reforms for Foreign Portfolio Investors (FPIs)

2.1 Net Settlement Mechanism

SEBI has approved the introduction of net settlement for FPIs, which will:

  • Improve capital efficiency
  • Reduce settlement-related operational complexities
  • Enhance overall market liquidity and ease of transactions

3. Changes in Social Impact Investment Framework

3.1 Reduction in Minimum Investment Threshold

The minimum investment threshold for Social Impact Funds has been reduced, with the objective of:

  • Increasing investor participation
  • Promoting impact investing and social finance
  • Broadening access to such investment avenues

4. Amendments to InvITs and REITs Regulations

SEBI has approved amendments relating to:

  • Infrastructure Investment Trusts (InvITs)
  • Real Estate Investment Trusts (REITs)

These changes are aimed at improving operational flexibility, governance standards, and investor participation in these instruments.

5. Revisions to ‘Fit and Proper’ Criteria

SEBI has also approved amendments to the ‘fit and proper’ criteria, which govern eligibility and integrity standards for market participants, to enhance regulatory clarity and consistency.

6. Objective of the Reforms

The measures collectively aim to:

  • Enhance ease of doing business in the securities market
  • Improve regulatory clarity and consistency
  • Promote market efficiency and investor participation
  • Strengthen the overall regulatory framework across investment vehicles

These decisions reflect SEBI’s continued efforts to balance market development with robust regulatory oversight.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied