Specialised Investment Funds

The ₹10 lakh SIF floor: what SEBI actually wrote

A fall in NAV does not force you out of a Specialised Investment Fund. It does stop you redeeming part of your money. The difference between a passive and an active breach, with the paragraph numbers.

19 September 2026 · Raja Banka · RHB Wealth Pro, Salt Lake, Kolkata

Ask five people in the industry what the ₹10 lakh SIF minimum means and you will get five answers. We got one of them wrong ourselves before going back to the circulars, so this note sticks to what SEBI actually wrote, with the paragraph numbers, and you can check every line of it.

Three documents matter. The framework circular of 27 February 2025, which took effect on 1 April 2025. A pair of clarifications in April. And a circular of 29 July 2025 dealing only with how the threshold gets monitored.

What the floor is

Under Regulation 49X(1) a SIF cannot accept less than ten lakh rupees from an investor across all its investment strategies. Paragraph 4.1.1 of the framework circular puts it this way: the AMC has to ensure that an investor's aggregate investment across all strategies offered by the SIF, counted at PAN level, is not below ₹10 lakh.

So it is ten lakh in total at one fund house, not ten lakh per strategy. Split across three strategies of the same AMC, ten lakh is fine. Four lakh with one AMC and six with another is not, and neither account qualifies.

Paragraph 4.1.2 adds something people miss. The ten lakh counts only your SIF money. Whatever you hold in that AMC's ordinary mutual fund schemes does not go towards it.

Accredited investors are outside the requirement altogether. And 4.1.3 permits SIPs, SWPs and STPs inside a SIF, so long as the threshold keeps being met.

What happens when the value falls

This is where the confusion sits, and it is worth being exact, because SEBI treats two situations quite differently.

Markets fall: nothing happens

Paragraph 4.1.4.2 is unambiguous. A passive breach, which it defines to include one caused by a decline in NAV, shall not be treated as a violation of the minimum investment threshold.

Your ten lakh becomes nine and a half in a bad quarter. Nobody redeems you. No notice arrives. You are not in breach of anything and you can sit there as long as you like.

There is one consequence, and it is about flexibility rather than compulsion. The same paragraph says that while you are below the threshold on a passive breach, you are only permitted to redeem the entire remaining amount. Partial redemption is off the table until the value recovers above ten lakh.

A fall in NAV does not force you out of a SIF. It does take away your ability to take out part of the money while you are below the line.

You take money out: a clock starts

An active breach is different, and the July 2025 circular sets out exactly what follows. Paragraph 3.3 defines it as a fall below ₹10 lakh in the aggregate value of your investment across all the SIF's strategies, caused by a transaction you initiated. Redemption, transfer, sale. Your own action, in other words.

When that happens:

• Your units across the strategies of that SIF are frozen for debit.
• You get 30 calendar days' notice to rebalance back above the threshold.
• Rebalance inside the 30 days and the units are unfrozen, with no further action taken.
• Miss the deadline and the frozen units are redeemed automatically by the AMC, at the NAV of the business day after day 30.

Note that the trigger is something you did. Not something the market did.

What we tell clients before they sign

The threshold is not a trapdoor, and anyone who has told you a bad quarter will eject you from a SIF has read a news summary rather than the circular. We know, because that is the mistake we made.

The real point for a family is liquidity. Enter at exactly ten lakh and one weak quarter leaves you unable to take out part of the money until the fund recovers. Enter with room above the floor and the question never arises. Which is why our first conversation about a SIF is rarely about the strategy at all. It is about whether that money can genuinely sit undisturbed, through a bad eighteen months, without the family needing it for a factory expansion or a property payment.

If the answer is yes, the structure deserves a look. If it is "probably", the flexibility clause matters a great deal more than whatever the strategy promises.

Questions this raises

Is the ₹10 lakh SIF minimum per strategy or in total?

In total. Paragraph 4.1.1 of SEBI's framework circular of 27 February 2025 requires the AMC to ensure an investor's aggregate investment across all strategies offered by the SIF, at PAN level, is not below ₹10 lakh. The threshold applies separately at each fund house, and paragraph 4.1.2 excludes money held in that AMC's ordinary mutual fund schemes from the calculation.

If the NAV falls and my SIF holding drops below ₹10 lakh, do I have to redeem?

No. Paragraph 4.1.4.2 states that a passive breach, including one caused by a decline in NAV, shall not be treated as a violation of the minimum investment threshold. You are not redeemed and no notice is issued. The only consequence is that while you remain below the threshold you may redeem only the entire remaining amount rather than a part of it.

What is an active breach of the SIF minimum investment threshold?

Under paragraph 3.3 of SEBI's circular of 29 July 2025, an active breach is a fall below ₹10 lakh in the aggregate value of an investor's holding across all the SIF's strategies caused by a transaction the investor initiated, such as a redemption, transfer or sale.

What happens after an active breach of the SIF threshold?

The investor's units across the strategies of that SIF are frozen for debit and a notice of 30 calendar days is issued to rebalance above the threshold. If the investor rebalances within 30 days the units are unfrozen and no further action is taken. If not, the frozen units are automatically redeemed by the AMC at the NAV of the business day following the thirtieth day.

Are accredited investors exempt from the SIF minimum?

Yes. Regulation 49X(1) provides that the minimum investment amount does not apply to an accredited investor.

Can I run a SIP into a Specialised Investment Fund?

Yes. Paragraph 4.1.3 of the framework circular permits systematic investment, withdrawal and transfer plans within a SIF, provided compliance with the minimum investment threshold is maintained.