Fundraising or crowdfunding is a powerful way to raise capital for anything from a business, organization, or personal cause. In India, the rules and regulations for starting crowdfunding in India are governed by the Securities and Exchange Board of India (SEBI). The necessary license that an individual or organization needs to obtain from SEBI to start a crowdfunding campaign in India is the SEBI Registered intermediary (RI) license. The permit allows crowdfunding platforms to receive money from small investors on behalf of large businesses and other organizations that are raising capital.
To receive the license, the company must fulfill several requirements prescribed by SEBI. These include having 3 years of experience in the financial services sector, a minimum net worth of INR 10 crores, a board of directors with at least one independent director, and so on. Additionally, the applicant must provide detailed information about their background, business model, and operations, along with other regulatory and legal documents.
Once the application is approved, the company must comply with all the applicable regulations, including KYC and anti-money laundering regulations, market monitoring, and investor protection measures. Additionally, the platform must regularly submit periodic reports to SEBI. Moreover, SEBI can inspect the platform at any time to ensure compliance with regulations. The SEBI RI license helps protect both the investors of a crowdfunding campaign and the businesses that are raising money. It ensures that there is a degree of transparency and accountability in the fundraising process which helps maintain the trust and confidence of investors. Thus, the SEBI RI license is a key requirement for start crowdfunding in India.