Market regulator Securities and Exchange Board of India (SEBI) has notified revamped portfolio management regulations, introducing separate net-worth requirements for regular portfolio managers and entities exclusively offering the Portfolio Management Service Route for Investment in Mutual Fund units (PRIM).
The SEBI (Portfolio Managers) Regulations, 2026, will come into effect from April 1, 2027, replacing the 2020 regulations. Regular portfolio managers must maintain a minimum net worth of Rs 5 crore, with at least 10 percent held in unencumbered liquid assets. Existing managers have 12 months from commencement to comply. Entities exclusively offering PRIM must maintain Rs 2 crore, with the same liquid-asset condition.
The minimum investment for regular PMS is Rs 50 lakh, compared with Rs 25 lakh under PRIM. The latter permits investment in direct plans of domestic mutual funds, including index funds, exchange-traded funds and specialised investment funds. Portfolio managers under the regular framework can invest in mutual funds only through direct plans and cannot charge clients distribution-related fees.
The regulations permit investment in foreign securities subject to conditions specified by SEBI. They also allow investments in unlisted securities and exchange-traded derivatives, subject to applicable limits. Large-value accredited investors may have up to 100 percent of their assets under management invested in unlisted securities, subject to disclosures and agreed terms.
The framework also provides for eligible fund managers managing eligible investment funds investing in Indian or foreign securities, and co-investment portfolio managers serving investors in certain alternative investment funds.