๐๐๐๐ ๐ฉ๐ซ๐จ๐ฉ๐จ๐ฌ๐๐ฌ ๐ ๐ฆ๐๐ฃ๐จ๐ซ ๐จ๐ฏ๐๐ซ๐ก๐๐ฎ๐ฅ ๐จ๐ ๐ญ๐ก๐ ๐๐จ๐ซ๐ญ๐๐จ๐ฅ๐ข๐จ ๐๐๐ง๐๐ ๐๐ซ๐ฌ ๐ซ๐๐ ๐ฎ๐ฅ๐๐ญ๐ข๐จ๐ง๐ฌ
The Securities and Exchange Board of India (SEBI) has released a consultation paper proposing a comprehensive review of the SEBI (Portfolio Managers) Regulations, 2020, along with the draft Portfolio Managers Regulations, 2026.
The review comes amid significant growth in Indiaโs PMS industry, with AUM rising from INR 18.07 lakh crore in April 2019 to INR 42.61 lakh crore as of May 31, 2026, and registered portfolio managers increasing from 226 in 2020 to 515.
๐๐๐ฒ ๐ฉ๐ซ๐จ๐ฉ๐จ๐ฌ๐๐ฅ๐ฌ ๐ข๐ง๐๐ฅ๐ฎ๐๐:
1. ๐๐น๐ฑ๐ข๐ฏ๐ฅ๐ฆ๐ฅ ๐ช๐ฏ๐ท๐ฆ๐ด๐ต๐ฎ๐ฆ๐ฏ๐ต ๐ถ๐ฏ๐ช๐ท๐ฆ๐ณ๐ด๐ฆ: Portfolio managers may invest in โto-be-listedโ securities, while Discretionary Portfolio Management Services may be permitted to invest up to 10% of client AUM in investment-grade unlisted debt securities.
2. ๐๐ฐ๐ณ๐ฆ๐ช๐จ๐ฏ ๐ด๐ฆ๐ค๐ถ๐ณ๐ช๐ต๐ช๐ฆ๐ด: SEBI proposes to permit both discretionary and non-discretionary portfolio managers to invest client funds in specified foreign securities, including listed equity shares, listed debt securities and eligible overseas funds, subject to FEMA requirements and explicit positive client consent.
3. ๐๐ฏ๐ต๐ณ๐ฐ๐ฅ๐ถ๐ค๐ต๐ช๐ฐ๐ฏ ๐ฐ๐ง โ๐๐-๐๐๐โ: A dedicated PMS category investing exclusively in direct plans of mutual funds, including ETFs and SIFs, with the minimum ticket size reduced from INR 50 lakh to INR 25 lakh and net worth requirement from INR 5 crore to INR 2 crore.
4. ๐๐ณ๐ฆ๐ข๐ต๐ฆ๐ณ ๐ฅ๐ฆ๐ณ๐ช๐ท๐ข๐ต๐ช๐ท๐ฆ๐ด ๐ง๐ญ๐ฆ๐น๐ช๐ฃ๐ช๐ญ๐ช๐ต๐บ: Portfolio managers may be permitted to undertake total exposure of up to 1.25x the clientโs AUM, including unhedged short exposure through equity exchange-traded derivatives of up to 50% of AUM, subject to prescribed limits and client consent.
5. ๐๐ญ๐ข๐ต๐ง๐ฐ๐ณ๐ฎ ๐ง๐ฐ๐ณ ๐ช๐ฏ๐ฅ๐ฆ๐ฑ๐ฆ๐ฏ๐ฅ๐ฆ๐ฏ๐ต ๐ง๐ถ๐ฏ๐ฅ ๐ฎ๐ข๐ฏ๐ข๐จ๐ฆ๐ณ๐ด: SEBI is also consulting on whether independent fund managers should be allowed to bring and manage their own clients under the umbrella of a SEBI-registered Portfolio Manager, which would provide infrastructure and compliance support while retaining regulatory accountability.
The consultation also explores global fund management through Portfolio Manager registration, relaxation of dealing-room requirements for smaller managers, and rationalisation and consolidation of compliance requirements.
Taken together, the proposals indicate a significant evolution of the PMS framework from a relatively conventional portfolio-management regime towards a broader and more differentiated asset-management ecosystem, while retaining client consent, segregation and regulatory accountability as key safeguards.
Public comments are invited to the consultation paper until August 13, 2026.
Readers can share their views with Regstreet Law Advisors at info@regstreetlaw.com.