Markets regulator Sebi has notified the portfolio management services (PMS) framework, allowing portfolio managers to invest in Initial Public Offerings (IPOs), primary market debt issuances, and a wider range of overseas securities, while introducing a separate route for them for investing in mutual funds.
The Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026, which replace the existing 2020 framework, will become effective from April 1, 2027.
Under the new PMS framework, portfolio managers will invest in IPO, primary market issuance for debt securities, securities listed or traded on a stock exchange, money market instruments, mutual funds on behalf of their clients, Sebi said in a notification dated October 7.
They will also be allowed to invest in foreign securities, unlisted securities, and exchange-traded derivative instruments.
“The portfolio manager may offer discretionary or non-discretionary or advisory services for investment up to hundred per cent of the assets under management of large value accredited investors in unlisted securities, subject to appropriate disclosures in the disclosure document and the terms agreed between the client and the portfolio manager,”Sebi said.
Sebi also introduced Portfolio Managers Route for Investing in Mutual Fund units (PRIM) for enabling portfolio managers to invest clients’ funds in direct plans of mutual funds including ETFs, Index Funds and Specialised Investment Funds (SIFs) of Indian Asset Management Companies (AMCs), with a minimum investment threshold of Rs 25 lakh. Additionally, entities exclusively offering PRIM are required to maintain a minimum net worth of Rs 2 crore.
The regulator further introduced the concept of Independent Fund Managers, who can manage and operate client portfolios in association with registered portfolio managers, while the registered portfolio manager will retain responsibility and liability for their activities.
To ease compliance, Sebi has relaxed the educational qualification for principal officers. Now, even graduates will be eligible to function as principal officer.
The notification follows the Sebi board’s clearance to a proposal in this regard in September.
