SEBI has approved a proposal to introduce the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026. The proposed framework aims to simplify compliance and give portfolio managers greater flexibility across mutual funds, SIFs, foreign securities, debt and derivatives.
The Securities and Exchange Board of India (SEBI) Board approved a proposal to introduce the SEBI (Portfolio Managers) Regulations, 2026 at its meeting held on 24 September 2026.
The proposed regulations will replace the existing 2020 framework. SEBI said the changes aim to support the development of the Portfolio Management Services (PMS) industry, ease compliance, simplify regulatory provisions and remove redundant requirements.
One of the key changes is greater flexibility in how PMS can invest client money. Portfolio managers will be permitted to invest in IPOs and primary market issuances in the debt market.
Under discretionary PMS, portfolio managers will also be allowed to invest up to 10% of a client’s assets under management (AUM) in investment-grade, non-convertible, unlisted debt securities, subject to the client’s consent.
The proposed framework also allows greater flexibility in exchange-traded derivatives, with investments permitted up to 1.25 times the client’s AUM.
A new route for mutual fund investments
SEBI has proposed the Portfolio Managers Route for Investing in Mutual Fund units (PRIM). This would allow portfolio managers to invest clients’ money in direct plans of mutual funds, including ETFs, index funds and Specialised Investment Funds (SIFs) offered by Indian asset management companies.
An existing portfolio manager could offer PRIM as a separate investment approach, subject to a minimum ticket size of ₹25 lakh.
A new applicant operating exclusively under PRIM would need a minimum net worth of ₹2 crore. The proposed framework also includes a fixed management fee cap of 1% of client AUM, while performance-based fees would also be permitted.
The framework proposes a 25% cap on investments in schemes of affiliated, group or associate asset management companies.
Foreign securities under PMS
The proposed regulations would also enable discretionary and non-discretionary portfolio managers to invest in specified foreign securities. These include listed equity, debt, REITs, overseas mutual funds, ETFs, index funds and foreign government debt, subject to the applicable FEMA and RBI Liberalised Remittance Scheme requirements.
How does it affect you?
If you use or are considering PMS, the proposed framework could expand the range of investment options available through portfolio management services. The PRIM route could also create a regulated route for portfolio managers to include direct mutual fund plans, ETFs, index funds and SIFs in a separate investment approach.
These are proposed regulatory changes approved by the SEBI Board. The final regulatory framework and its implementation will determine how these provisions operate in practice.
