SEBI Overhauls Portfolio Managers Framework and Clears Major Regulatory Relaxations Across Market Segments — October 15, 2026

In a comprehensive move to simplify compliance and modernise wealth management frameworks, the Securities and Exchange Board of India (SEBI) has approved the replacement of the SEBI (Portfolio Managers) Regulations, 2020 with the newly structured SEBI (Portfolio Managers) Regulations. The regulatory revamp comes as assets under management (AUM) in India's portfolio management services (PMS) ecosystem surged from ₹18.07 lakh crore in April 2019 to over ₹44 lakh crore.

The regulator's comprehensive overhaul is designed to eliminate regulatory clutter, reduce administrative overhead, and expand asset allocation capabilities for high-net-worth individuals (HNIs) and family offices. Demonstrating SEBI's drive toward regulatory rationalisation, the size of the rulebook has been slashed from 70 pages down to 33 pages—a 53% cut—while reducing the word count by roughly 42% and trimming provisos from 47 to just four.

Key Investment Flexibilities for Portfolio Managers:

• Primary Market Access: Portfolio managers are now permitted to participate directly in initial public offerings (IPOs) and primary debt issuances, overcoming previous restrictions that limited discretionary mandates to already-listed and traded securities.
• Derivative Exposures: Flexibility has been broadened to take exchange-traded derivative positions up to 1.25 times client AUM under defined parameters and safeguards.
• Unlisted Debt Allocation: Discretionary managers can allocate up to 10% of portfolio value into investment-grade unlisted debt instruments, provided explicit client consent is obtained.
• Foreign Asset Investments: Clear paths have been carved out to facilitate investments in overseas securities under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS) and FEMA framework.
• Specialised Mutual Fund Route: A dedicated pathway focused exclusively on investing in mutual fund units has been outlined, carrying lower minimum thresholds and a 1% cap on management fees to democratise managed portfolios.

Operational and Administrative Ease

To minimise onboarding bottlenecks, SEBI has moved to rationalise the reliance on standalone Powers of Attorney (PoA) for regular portfolio management processes by incorporating requisite authorities directly into standard client-manager agreements. However, compliance with statutory banking protocols under RBI guidelines for bank account operations remains intact.

Standardised client agreements and "Most Important Terms and Conditions" (MITC) disclosures are being introduced to ensure investors clearly understand cost structures and fee computations, with an enforced 30-day timeline for managers to resolve fee disputes.

Broad Regulatory Rationalisation Across Market Segments

The PMS overhaul was part of a wider slate of regulatory reforms cleared by the capital markets watchdog to enhance business agility:

• Research Analysts: SEBI eliminated the mandate requiring registered research analysts to record and archive all client telephonic interactions.
• REITs and InvITs: Frameworks were relaxed to facilitate foreign capital inflow and advance ease of execution.
• Unified Advertisement Code: Regulated entities now share a single advertising standard, permitting celebrity endorsements with prescribed guardrails and requiring reporting within three days.

The revised framework reflects the growing maturity of India's capital markets. By removing archaic procedural hurdles while preserving critical investor protections, the new rules equip portfolio managers to offer more sophisticated, multi-asset wealth management solutions to Indian investors.

Tags: SEBI Portfolio Management Services APMI Capital Markets Wealth Management High Net Worth Investors