SEBI has issued a new circular that brings a major operational shift for Alternative Investment Funds. The regulator now requires AIFs to report the value of their units, specifically the Net Asset Value, to depositories in a structured and time-bound manner.
This requirement applies across all AIF categories and is effective immediately. While valuation of investments was already mandatory, this circular ensures that NAV data becomes part of the depository ecosystem. The goal is greater transparency, better system integration, and improved access to information for investors.
Who Is Covered Under the Circular?
The circular applies to three key market participants:
- All Alternative Investment Funds, including Category I, II, and III
- All Registrars and Transfer Agents servicing AIFs
- All Depositories operating in the Indian securities market
If you are involved in issuing, valuing, recording, or displaying AIF units, this circular is directly relevant to your operations.
Regulatory Context: Valuation and Unit Issuance
Under the SEBI (Alternative Investment Funds) Regulations, 2012, AIFs raise capital by issuing units to investors. The value of these units depends on the valuation of the fund’s investment portfolio. SEBI has reiterated the existing valuation framework:
- Category I and Category II AIFs must value their investments at least once every six months.
- This frequency can be extended to one year, but only with approval from at least 75 percent of investors by value.
- Category III AIFs must ensure that NAV calculation is independent of fund management.
- Category III close-ended funds must disclose NAV at least quarterly.
- Category III open-ended funds must disclose NAV at least monthly.
These requirements remain unchanged. What is new is where this NAV data must now be reported.
Mandatory Dematerialization Is the Foundation
SEBI has already mandated that AIF units be issued only in dematerialized form. This circular builds on that framework.
Once units exist in demat form, SEBI expects their valuation data to be available within the same infrastructure. Reporting NAVs to depositories is therefore a logical extension of the demat requirement and not a standalone obligation.
Core Requirement: Uploading NAV to Depositories
AIFs must upload the latest available NAV for each ISIN of their units into the depository system. This upload must be done through the fund’s Registrar and Transfer Agent.
Timeline for Upload
The NAV must be uploaded:
- Before May 01, 2026, or
- Within 30 days from the valuation date,
Whichever of the two is later.
This provides flexibility for funds that complete valuations closer to the deadline, while still ensuring system-wide readiness by May 2026.
How the Valuation Date Is Defined
SEBI has clearly specified how the valuation date should be determined for compliance purposes:
- If the valuation is carried out by an independent valuer, the valuation date is the date of the valuation report.
- If the valuation is carried out internally, the valuation date is the date on which the valuation is formally documented in the fund’s internal records.
This clarity removes uncertainty and helps funds calculate the 30-day reporting window accurately.
Accountability of the AIF Manager
The circular makes it explicit that responsibility rests with the AIF manager. The manager must ensure that:
- NAV data is uploaded within the prescribed timeline
- The information uploaded is accurate and complete
Even though RTAs perform the operational upload, the regulatory accountability remains with the fund manager. This has direct implications for internal controls, delegation frameworks, and compliance oversight.
Obligations of Depositories
Depositories have been assigned several implementation responsibilities. They must:
- Build and maintain infrastructure to accept NAV uploads from RTAs
- Ensure NAV data is reflected appropriately in depository systems
- Display a standard disclaimer wherever AIF NAV is shown
- Amend relevant bye-laws, rules, and regulations
- Inform their members and participants and publish the circular on their websites
The mandated disclaimer clarifies that NAV is based on the valuation methodology and accounting practices followed by the respective AIF and directs investors to fund documents for further details.
Compliance Test Report Must Capture This Requirement
Trustees or sponsors of AIFs must ensure that compliance with this circular is included in the Compliance Test Report prepared by the AIF manager.
This means compliance teams should update reporting templates and internal audit scopes to explicitly cover NAV uploading to depositories.
Effective Date and Legal Authority
The provisions of the circular are effective immediately. There is no phased implementation.
SEBI has issued the circular under its powers to protect investor interests and regulate securities markets, read with the relevant provisions of the SEBI Act, 1992 and the AIF Regulations, 2012.
Practical Next Steps for AIFs
To prepare effectively, AIFs should:
- Review valuation schedules and documentation practices
- Align with RTAs on NAV upload processes and data formats
- Validate ISIN-wise data readiness well in advance
- Update internal SOPs and compliance checklists
- Sensitize operations and compliance teams on timelines and accountability
Early action will reduce execution risk as the May 2026 deadline approaches.
Potential Gaps
While the circular meaningfully improves transparency and system-level reporting for AIFs, a few practical gaps remain. The compliance burden is placed entirely on the AIF manager even though execution depends on RTAs and depository systems, creating potential exposure to third-party delays. The circular also does not prescribe a standardized NAV format or data validation mechanism, which may lead to inconsistent presentation across platforms. In addition, there is no guidance on correcting errors, revising historical NAVs, or handling delayed uploads, leaving room for uncertainty during audits and inspections. Finally, the immediate effectiveness of the circular, combined with system readiness expectations by May 2026, may be operationally challenging for smaller AIFs unless further clarifications or implementation guidance are issued.
Conclusion
SEBI’s NAV reporting mandate is more than a procedural update. It signals a broader push toward standardized, system-level transparency in the AIF ecosystem.
Funds that proactively integrate this requirement into their governance and reporting processes will be better positioned for future regulatory developments. Those that treat it as a last-minute filing exercise may face avoidable compliance challenges.
Source: SEBI Circular dated 06/02/2026 on Reporting of value of units of Alternative Investment Funds (AIFs) to Depositories