As per the new regulation, compliance officers overseeing AIFs will now be obliged to get a formal certification from the National Institute of Securities Markets (NISM). More precisely, these professionals are required to pass the NISM Series-III-C: Securities Intermediaries Compliance (Fund) Certification Examination, which is the only way to ensure that they have the complete knowledge of the legal frameworks, risk management protocols, and ethical standards that are necessary to deal with the intricacies of alternative investments.
Implementation Timeline for AIF Managers
The regulator has set a long transition period for the industry to get ready for these requirements and to come up with a plan to deal with the changes. The circular that was issued in late 2025 not only allowed for gradual alignment with the new requirements but also mandated that compliance must be done by January 1, 2027. After this date, only the individuals who have passed the NISM certification will be qualified for the appointment or will be allowed to continue in the role of a compliance officer for an AIF manager.
Governance and Regulatory Accountability
SEBI has made the fund’s main stakeholders responsible for undertaking the verification of compliance with the rules with the intent to ensure compliance at the highest level. The trustees, the sponsors, and the managers of the AIFs have been required to include in their annual Compliance Test Reports (CTR) documentation and confirmation of compliance with this certification rule. This measure guarantees that the certification is nothing short of a prerequisite for eligibility that will be closely examined during regular audits by the regulatory authority.
Strengthening the Alternative Investment Landscape
This turning point occurs while the AIF industry in India has been rapidly expanding, with total commitment of investment surpassing the ₹15 lakh crore mark. The main purpose of the process of professionalising the compliance officer’s role, the primary “gatekeeper” of a fund, is to cut down the number of regulatory lapses and enhance the protection of investors. The presence of a well-trained compliance team is expected to lead disclosures that are more transparent, operational errors that are fewer, and a financial ecosystem that is more resilient.