SEBI is reviewing Portfolio Management Services (PMS) regulations to remove onboarding hurdles for Non-Resident Indians (NRIs). While NRI interest in Indian capital markets is growing, complex compliance and paperwork have kept their participation in the Rs 10.5 lakh crore PMS sector low. The upcoming consultation paper aims to address these friction points to help unlock diaspora wealth.
Detailed Coverage
The Securities and Exchange Board of India (SEBI) has initiated a comprehensive review of the Portfolio Management Services (PMS) framework, marking the first major assessment of these regulations since 2020. This move is largely aimed at streamlining the investment journey for Non-Resident Indians (NRIs), who currently contribute only a small fraction of the assets managed by the domestic PMS industry.
Challenges in the Current Onboarding Process
Despite India’s strong economic growth and inward remittances hitting $143.6 billion in FY26, the participation of the global Indian diaspora in professionally managed domestic portfolios remains limited. Industry experts point out that the primary barrier is not a lack of interest but an overly complex onboarding process. Currently, investors must navigate coordination between multiple entities, including the Reserve Bank of India (RBI) and the International Financial Services Centres Regulatory Authority (IFSCA).
The administrative burden is significant, involving requirements for specific NRI bank accounts, demat account integration, physical documentation, and complex attestation processes. Furthermore, many service providers remain hesitant to onboard clients from jurisdictions like the US and Canada, citing the high compliance costs associated with the Foreign Account Tax Compliance Act (FATCA). These hurdles often make the process time-consuming and costly compared to global standards for high-net-worth individuals.
Industry Recommendations and Strategic Shift
Market participants, led by the Association of Portfolio Managers in India (APMI), have been actively engaging with the regulator to suggest improvements. The industry is advocating for a more integrated framework that would allow for smoother capital flows and easier access for NRIs. The goal is to move toward a more digitized and frictionless environment that mirrors the sophisticated investment experiences these individuals encounter in other global markets.
There is also a growing demand from the diaspora for hybrid investment strategies. Investors are looking for professional management that can blend opportunities within the Indian growth story with access to international markets and currency diversification. APMI has presented the regulator with global benchmarking studies to demonstrate how other countries manage these cross-border investment flows effectively.
Next Steps for Investors
While the government took steps in the 2026 Budget to raise investment limits for NRIs in listed companies and strengthen the Portfolio Investment Scheme, industry executives note that these measures have not yet resulted in a substantial rise in new PMS account openings. The next important update will be the release of SEBI’s consultation paper, which is expected to outline specific proposals for regulatory changes. Investors should track the details of this paper, as it will likely determine the extent to which the current compliance friction is reduced and how quickly new, streamlined onboarding processes can be implemented.