SEBI Proposes Mutual Fund-Only PMS; Minimum Investment May Drop to ₹25 Lakh

The Securities and Exchange Board of India (SEBI) has proposed a dedicated mutual fund-only Portfolio Management Services framework as part of a comprehensive review of the SEBI (Portfolio Managers) Regulations, 2020. The proposal is intended to widen investment choices, lower entry barriers and simplify compliance requirements within the portfolio management industry.

Under the proposed framework, portfolio managers would be permitted to manage clients’ investments exclusively through direct plans of mutual fund schemes. The eligible investment universe would also include exchange-traded funds and specialised investment funds. Entities offering this service would operate under a separate mutual fund-only PMS, or MF-PMS, registration.

Existing portfolio managers may also be allowed to provide MF-PMS through a distinct investment approach. SEBI said the proposal follows representations from industry stakeholders seeking a simplified PMS model focused entirely on mutual fund products.

The consultation paper proposes reducing the minimum amount required from each MF-PMS client from ₹50 lakh to ₹25 lakh. It also recommends lowering the minimum net worth requirement for applicants from ₹5 crore to ₹2 crore, potentially making it easier for eligible entities to enter this segment.

Portfolio managers operating under the proposed framework would be allowed to levy a fixed management fee of up to 2.5% of the client’s assets under management.

SEBI initiated the regulatory review in view of the substantial growth and increasing use of technology in the PMS industry. Industry assets under management increased from ₹18.07 lakh crore in April 2019 to ₹42.61 lakh crore as of May 31, 2026.

During the same period, the number of PMS clients rose from approximately 1.50 lakh to 2.19 lakh. The number of registered portfolio managers also increased from 226 in 2020 to 515 as of May 31, 2026.

According to SEBI, the proposed amendments seek to align the regulatory framework with changing industry conditions, increased investor awareness and growing demand for personalised investment solutions and diversified portfolios. The proposals are currently under consultation and will be considered after receiving public and stakeholder feedback. CA Sansaar