Why Sebi's decision on AIF certification is need of the hour and should be welcomed
Sebi mandated that 'at least one key personnel' on the investment team of the 'manager of an alternative investment fund (AIF)' should have NISM (National Institute of Securities Market) certification by passing the NISM Series-XIX-C exam. This regulation came into force from May 10 and will have to be complied with by May 9, 2025.
What does Sebi hope to achieve by setting down this rule for investment managers? One can only assume the following:
Positive signalling: It would send a powerful signal to teams and communities of the prowess of a certified fund manager.
Certification=legitimacy: Almost every other profession — lawyers, company secretaries and doctors — requires certification. Moreover, with changes to the regulatory regime, experienced professionals have undergone additional examinations to become insolvency professionals under IBC, chartered valuers, or chartered financial analysts. Certification brings legitimacy and is an invaluable tool for any profession's self-regulating ability.
Lifelong learning: As professionals, the value of adapting to changing business environments can't be understated. Taking this exam not only encourages young professionals, but also exemplifies a commitment to continuing education and evolution.
Sebi's decision may be met with scepticism, especially among the senior PE/VC community. However, it makes sense on several front:
Go Global: The market regulator has significantly altered how AIFs operate since introducing AIF guidelines in 2012. Each change has aimed to
