- SEBI has proposed introducing a new mutual fund-only portfolio management services (MF-PMS) framework with lower entry barriers, alongside a broader overhaul of regulations governing portfolio managers.
- The proposed MF-PMS framework would lower the minimum investment threshold to ₹25 lakh from the current ₹50 lakh for regular PMS, while easing the minimum net worth requirement for MF-PMS applicants to ₹2 crore from ₹5 crore.
- The framework would also allow portfolio managers to exclusively manage investments in direct plans of MF schemes and specialised investment funds (SIFs).
- The consultation paper also proposes allowing portfolio managers to invest client funds in overseas equities, debt instruments and mutual funds, subject to Foreign Exchange Management Act and Liberalised Remittance Scheme limits.
- In another proposal, SEBI has suggested permitting investments in ‘to-be-listed’ domestic securities to broaden the investment universe.
- The proposals aim to improve the ease of doing business and provide flexibility to portfolio managers, the Securities and Exchange Board of India said in a consultation paper.
- The PMS industry’s assets under management have increased to ₹42.61 trillion as of May 31, 2026, from ₹18.07 trillion in April 2019, prompting SEBI to undertake a comprehensive review of its rules.
- The regulator noted that the PMS industry’s assets under management have more than doubled to 515 since the regulations were revamped in 2020.
- India receives over $140 billion annually from its overseas diaspora, yet industry participants estimate NRI investors contribute only a low single-digit share of PMS assets.
- The PMS business in India has a curious blind spot: almost none of that growth has come from non-resident Indians.
SEBI's proposed MF-PMS framework aims to lower barriers for mass-affluent investors by reducing the minimum investment threshold to ₹25 lakh and the net worth requirement to ₹2 crore. This initiative is part of a broader regulatory overhaul to adapt to the industry's rapid growth and changing investor needs.
The framework will also allow portfolio managers to invest in overseas equities, debt instruments, and to-be-listed domestic securities, expanding the investment universe significantly. Additionally, it proposes that discretionary portfolio managers can allocate up to 10% of client assets to investment-grade unlisted debt securities.
According to SEBI, the assets under management (AUM) in the PMS industry have surged to ₹42.61 trillion as of May 31, 2026, from ₹18.07 trillion in April 2019, reflecting a compound annual growth rate of 17% since FY21. The number of registered portfolio managers has also more than doubled to 515 since the regulations were revamped in 2020.
The Association of Portfolio Managers in India (APMI) supports the framework, stating it could widen access to millions of investors and strengthen the PMS ecosystem. APMI chairman Biharilal Deora emphasized the need for robust investor safeguards to ensure the framework's success.
SEBI has invited comments on its proposals by August 13, indicating a collaborative approach to refining the regulatory landscape for portfolio management services.
“The proposed MF-PMS framework would cut the minimum net worth requirement to ₹2 crore from ₹5 crore and permit fixed management fees of up to 2.5% of AUM. Separately, SEBI's consultation paper also suggests giving portfolio managers derivative exposure up to 1.25 times client AUM, with comments invited by August 13.”
