With the increased minimums, the regulator aims to discourage investment into riskier products.

The Securities and Exchange Board of India has called for public opinion on the proposal to raise the minimum limit on investment into portfolio management services and alternative investment funds, in a bid to protect private investors from riskier products.

With the increased minimums, the regulator aims to discourage activity into so-called riskier investments, compared to the conventional channels. The SEBI proposes that the minimum investment limit in PMS be increased to Rs25 lakh ($56,000), while other alternative funds, like art and collective investment schemes, be raised to Rs10 lakh. 

PMS and alternative schemes are highly attractive because they aim to deliver 3 to 4 per cent higher returns than equities. However, in terms of regulation and disclosure, SEBI says these asset classes have yet to be subjected to formal guidelines. At present, the minimum investment amount for PMS is Rs5 lakh.

"While institutions and high net worth investors are expected to be savvy investors and need not be protected from market and credit risk, there is need for a framework to deter from fraud, unfair trade practices, and minimise conflicts of interest," said the regulator in its statement. 

The full text of the concept paper may be found here.