SEBI has released draft rules to modernize Portfolio Management Services (PMS), proposing lower entry costs and new access to foreign markets and unlisted debt. These changes aim to simplify operations for an industry now managing over ₹42 lakh crore. Investors have until August 13 to provide feedback on the proposed framework.
Detailed Coverage
The Securities and Exchange Board of India (SEBI) has unveiled a set of proposals to update the regulations governing Portfolio Management Services (PMS). As of May 31, 2026, the PMS industry has grown significantly, reaching an asset base of ₹42.61 lakh crore. By relaxing existing rules, the regulator aims to bring more flexibility to how portfolio managers handle client money while simplifying the compliance process.
Access to Global and Unlisted Markets
A major focus of the proposal is expanding where PMS managers can invest. Currently, PMS strategies are largely confined to domestic assets. The new draft allows for investments in foreign securities, including global equities, debt instruments, and mutual funds, provided they follow existing foreign exchange and remittance laws. Additionally, discretionary portfolio managers may soon get permission to allocate up to 10% of their client’s portfolio into investment-grade, unlisted debt securities. The regulator is also considering allowing investments in securities that are in the process of being listed, which could broaden the range of available investment themes.
Lowering Barriers for New Investors
To make professional wealth management services accessible to a wider group of investors, SEBI is introducing a new category called the Mutual Fund-only PMS (MF-PMS). This category will exclusively invest in direct plans of mutual funds, Exchange Traded Funds (ETFs), and specialized funds. A key feature of this proposal is the reduced minimum investment requirement of ₹25 lakh, which is significantly lower than the standard ₹50 lakh required for traditional PMS accounts. This move is designed to cater to mass-affluent investors who seek professional management but may not meet the high threshold for standard portfolio services.
Operational and Compliance Flexibility
The regulator has also proposed several administrative changes to reduce the burden on portfolio managers. These include modernizing qualification standards for principal officers and shifting toward digital-only disclosure documents. For smaller firms, SEBI is considering relaxing the requirement for a mandatory physical dealing room and simplifying how clients transfer their demat accounts. Furthermore, the draft suggests allowing PMS managers to increase their exposure to exchange-traded derivatives up to 1.25 times the total assets under management, providing more room for hedging or strategy implementation.
These proposals are currently in the public consultation phase. Investors and industry stakeholders can submit their feedback to SEBI until August 13, 2026. Following this period, the final regulations will be drafted, which will determine the operational landscape for portfolio managers and the specific range of products available to clients.