The regulator’s consultation paper suggests overseas investments, a new “mutual fund-only” category, and easier compliance as PMS assets more than double in six years
The Securities and Exchange Board of India (SEBI) is proposing changes to the SEBI (Portfolio Managers) Regulations, 2020. Their consultation paper was published on 23rd July, 2026. The reason cited is the explosive growth of the PMS industry, with assets under management (AUM) having grown more than double in the past 6 years.
The AUM of PMS is at ₹ 42.61 lakh crore as of May 2026, compared to ₹ 18.07 lakh crore in April 2019. The number of clients has also increased, from 1.5 lakh to 2.19 lakh, and the number of registered portfolio managers more than doubled to 515
Opening Up New Investment Avenues
Among the most significant proposals is expanding what portfolio managers can invest in. SEBI wants to allow PMS providers to invest in overseas listed equity and debt securities, “to be listed” securities, and limited exposure to unlisted debt instruments, up to 10% of a client’s AUM for discretionary managers. Currently, PMS managers cannot invest client funds in foreign securities, unlike individual investors using the Liberalised Remittance Scheme.
A New Category for Mass-Affluent Investors
SEBI has also proposed a simplified “mutual fund-only” PMS framework aimed at investors seeking professional management of mutual fund holdings specifically. Under this MF-PMS category, the minimum client investment would drop from ₹ 50 lakh to ₹ 25 lakh, and the minimum net worth requirement for applicants would fall from ₹ 5 crore to ₹ 2 crore, with strict client-level separation required for firms also operating as mutual fund distributors.
Easing the Compliance Burden
Some of the proposed changes include a higher derivative exposure of 1.25x AUM for hedging purposes, allowing independent fund managers to operate as sub-advisers to PMS platforms, and relaxing the requirement of a separate dealing room for smaller PMS with AUM of less than ₹ 100 crore.
SEBI has framed the reforms as balancing greater flexibility and product diversity with continued investor protection as the industry matures.
