SEBI Proposes Mutual Fund-Only PMS Framework; Seeks Public Comments on Regulatory Changes

The Securities and Exchange Board of India (SEBI) has released a consultation paper proposing a comprehensive review of the SEBI (Portfolio Managers) Regulations, 2020. The proposals include the introduction of a mutual fund-only Portfolio Management Service (MF-PMS) framework, lower investment thresholds and simplified compliance requirements for the portfolio management industry. 

According to SEBI, the proposed changes aim to expand investment opportunities, ease regulatory compliance and align the framework with the evolving needs of investors and the growing PMS industry. 

SEBI Proposes Mutual Fund-Only PMS Category 

One of the key proposals is the creation of a dedicated Mutual Fund-only Portfolio Management Service (MF-PMS) category. 

Under the proposed framework, portfolio managers would manage client funds exclusively through direct plans of mutual fund schemes, including: 

SEBI said the proposal follows industry representations seeking a simplified PMS framework focused solely on mutual funds. 

Existing portfolio managers would also be permitted to offer MF-PMS through a separate investment approach under a dedicated registration. 

Read More: Axis AMC Acquires Axis Securities’ PMS Business; Combined AUM Hits ₹15,000 Crore 

Proposed Changes to Entry Requirements 

SEBI has proposed easing entry requirements for both investors and portfolio managers. 

The regulator has suggested: 

According to the consultation paper, these changes are intended to improve accessibility while maintaining an appropriate regulatory framework. 

Cap on Management Fees 

The regulator has also proposed a cap on fixed management fees under the new MF-PMS framework. 

If implemented, portfolio managers offering MF-PMS would be allowed to charge a fixed management fee of up to 2.5% of a client's Assets Under Management (AUM). 

PMS Industry Sees Strong Growth 

SEBI noted that the Portfolio Management Services industry has expanded significantly in recent years. 

As of May 31, 2026: 

The regulator said the review reflects increasing investor sophistication, greater use of technology, and rising demand for personalised investment solutions. 

Conclusion 

SEBI's consultation paper proposes several changes to the PMS regulatory framework, including a dedicated mutual fund-only PMS category, lower investment thresholds and simplified compliance requirements. The proposals are currently open for public feedback and may be considered after the consultation process is completed. 

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