SEBI Portfolio Managers Regulations, 2026: Key Changes
- Introduction
The Securities and Exchange Board of India (SEBI) has introduced a new regulatory framework for portfolio management services (“PMS”) in India through the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026 (“2026 Regulations”). The new framework replaces the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020 (“2020 Regulations”) and is scheduled to come into force on 1 April 2027.
The revision marks a significant development in the regulation of portfolio management services Rather than merely amending individual provisions, SEBI has undertaken a broader restructuring of the existing framework, with the objective of simplifying regulatory requirements, easing compliance burden and expanding the investment opportunities available to clients.
This article examines the principal changes introduced by the 2026 Regulations.
- From the 2020 Regulations to the 2026 Framework
The SEBI (Portfolio Managers) Regulations, 2020 replaced the earlier SEBI (Portfolio Managers) Regulations, 1993. On 23 July 2026, SEBI issued a Consultation Paper on Comprehensive Review of SEBI (Portfolio Managers) Regulations, 2020, proposing changes to the existing regulatory framework. Following the review, SEBI considered the comprehensive review of the 2020 Regulations at its Board meeting held on 24 September 2026 and approved the 2026 Regulations.
Their significance of the 2026 Regulations lies in expanding the scope of activities that portfolio managers may undertake and the manner in which certain services may be structured.
- Types of Portfolio Management Services
Portfolio management services may be distinguished based on the nature of the authority exercised by the portfolio manager and the structure through which investments are managed.
- Discretionary Portfolio Management: The portfolio manager exercises investment discretion in accordance with the client’s need and applicable regulations.
- Non-Discretionary Portfolio Management: The portfolio manager provides investment recommendations but act according to the client’s directions.
- Advisory Services: The portfolio manager provides investment advice, while the client retains responsibility for investment decisions.
- Portfolio Managers’ Route for Investing in Mutual Fund Units (PRIM): Introduced under the 2026 framework, PRIM provides a separate route for managing eligible mutual fund investments and expands the range of services available within the portfolio management regulatory framework.
- Significant Changes in the 2026 Framework
4.1 Expansion of Permissible Investments
Under the SEBI 2020 Regulations, the management and administration of client portfolios, including the categories of investments available to portfolio managers was governed by Regulation 24. Regulation 24(3) permitted discretionary portfolio managers to invest in securities listed or traded on a recognised stock exchange, money market instruments, mutual fund units and other securities specified by SEBI.
The 2026 Regulations restructure this framework under Regulation 17 and expressly identify additional investment avenues and expands the scope to include initial public offerings (IPOs) and primary-market issuances of debt securities. The framework also permits non-discretionary portfolio managers to invest up to 10% of a client’s assets under management in specified unlisted, unrated securities.
4.2 Introduction of PRIM
Chapter VI of the SEBI (Portfolio Managers) Regulations, 2026 introduces the Portfolio Management Service Route for Investment in Mutual Fund Units (PRIM), establishing a separate regulatory framework that was not provided for as a distinct route under the 2020 Regulations. Regulations 29 to 34 of the 2026 Regulations govern its applicability, registration, eligibility criteria, permissible investments, minimum investment requirements and other operating conditions.
An applicant seeking to offer PRIM must apply for a certificate of registration. An existing portfolio manager intending to offer PRIM may be permitted to do so through a separate investment approach.
The framework prescribes specific eligibility and capital requirements for applicants exclusively offering PRIM. An applicant must have adequate infrastructure and appoint a principal officer and a compliance officer. The principal officer must satisfy the prescribed educational, certification and experience requirements, including the relevant NISM certification specified by SEBI and at least two years of experience in the securities market. The applicant must also maintain a minimum net worth of ₹2 crore throughout the certification period, separately from capital requirements relating to its other business activities while at least 10% of the minimum net worth must be maintained in unencumbered liquid assets.
Investments under PRIM permits investment in direct plans of mutual funds in India, including index funds, exchange-traded funds (ETFs) and specialised investment funds.
The Regulations also prescribe only a minimum investment of Rs. 25 lakhs for each client under PRIM whereas a regular PMS requires a minimum investment of Rs. 50 lakhs. Further under PRIM, the renewal of a portfolio upon maturity of the initial agreement period as a fresh investment. In addition, SEBI is empowered to specify further conditions concerning matters such as client segregation, record maintenance, fees and limits on investments in associates of the portfolio manager.
4.3 Introduction of Independent Fund Managers
The 2026 Regulations introduce Independent Fund Managers (IFMs) by expressly defining the term and permitting independent fund managers to manage client portfolios under the umbrella of a registered portfolio manager. An IFM is required to meet the qualification requirements prescribed for a principal officer.
- Conclusion
The SEBI (Portfolio Managers) Regulations, 2026 mark a significant revision of the regulatory framework governing portfolio management services in India. The expansion of permissible investments, introduction of PRIM and recognition of Independent Fund Managers reflect key changes in the scope and structure of portfolio management services under the new framework. With the new framework scheduled to come into force on 1 April 2027, portfolio managers should assess the relevant changes and take steps to ensure compliance with the revised requirements.
