On 23 July 2026 the Securities and Exchange Board of India released a public consultation paper that could redefine how affluent and mass-affluent investors access professional portfolio management. The paper proposes the largest rewrite of the Portfolio Managers Regulations since 2020. Two ideas that are of immediate interest to NRIs and HNIs are at its core — a mutual-fund-only PMS exclusively for them with an entry ticket of Rs 25 lakh and explicit permission to portfolio managers to invest client money in overseas securities.
The structural gap was created by the ₹50 lakh minimum and the inability of PMS managers to buy foreign securities for years. Under the Liberalised Remittance Scheme, resident Indians could invest abroad by themselves, but a regulated portfolio manager could not do so on their behalf. Onboarding was more frictionful for NRIs. The July 2026 proposals aim at both constraints simultaneously.
Quick Answer Box
What has SEBI proposed?
New MF only PMS category (minimum ₹25 lakh, net worth ₹2 crore for manager, fee cap 2.5 percent) Permission to invest in overseas listed equity and debt, to-be-listed securities, limited unlisted debt and higher derivatives flexibility. The public’s comments are due on 13 August 2026.
Who benefits most?
Mass affluent investors seeking professional management without the need to pick individual stocks, and HNIs/NRIs seeking global diversification within a SEBI regulated PMS structure.
Current industry size: ₹ 42.61 lakh crore AUM and 515 registered portfolio managers (as on 31 May 2026)
Macro Trend Analysis: Why SEBI Is Moving Now
Assets under PMS more than doubled from ₹18.07 lakh crore in April 2019 to ₹42.61 lakh crore by May 2026. The number of registered portfolio managers increased from 226 in 2020 to 515. The client base was approximately 2.19 lakh. This growth was accomplished under rules designed for a smaller, more homogeneous HNI segment. Investor sophistication, demand for customised solutions and the rise of global allocation preferences have outpaced the 2020 framework.
Meanwhile, mutual funds, AIFs and IFSC-based managers already have wider foreign access. The asymmetry of regulation came more and more to the fore. So, SEBI’s paper is about democratisation (lower ticket via MF-PMS) and parity (overseas securities and expanded domestic instruments).
Regulatory Impacts: Core Proposals in Detail
Mutual Fund-only PMS (MF-PMS)
A separate registration category limited to direct plans of mutual funds, ETFs and Specialised Investment Funds. Minimum client investment dips to ₹25 lakh. Criteria for net worth of applicants reduced to ₹2 crore. Management fee capped at 2.5 percent of AUM. Performance or hybrid fees allowed with client consent. There will not be double charging as exit-load provisions applicable to conventional PMS will not be applicable. The requirements for dealing room and other staff are relaxed. Mutual-fund distributors can do MF-PMS business with a strict segregation of activities and clients.
Overseas securities
Portfolio managers may invest client funds in listed foreign equities, listed foreign debt, overseas mutual funds or unit trusts investing in listed securities and overseas-listed REITs. All such investments are subject to FEMA and Liberalised Remittance Scheme . The client must give clear, positive consent. This single change closes a long standing gap between what an individual could do under LRS and what a regulated manager could do on behalf of the client.
Additional investment flexibility
Explicit permission to securities proposed to be listed (to-be-listed).
The Discretionary PMS is allowed to invest up to 10% of client AUM into unlisted debt securities that are of investment grade.
Exchange-traded derivatives exposure can be up to 125 percent of client AUM with client agreement, unhedged short equity-derivative exposure is limited to 50 percent of AUM, and options premium exposure is capped at 10 percent of AUM.
Ease-of-doing-business measures
Digital disclosure documents, longer filing windows, demat account portability on switching managers, removal of mandatory power of attorney requirement (with safeguards), framework for independent fund managers working on a registered portfolio manager platform.
Market Segment Impacts
The ₹25 lakh MF-PMS now provides a regulated, professionally advised and managed route for mass-affluent investors, which was earlier behind a ₹50 lakh wall. Today, many investors in the ₹25-50 lakh range are managing their own mutual-fund portfolios or are relying on advisory relationships that don’t have full discretion. The MF-PMS formalises that relationship under a SEBI framework.
The overseas-securities allowance and the limited unlisted-debt window opens up the palette for real multi-asset, multi-geography construction for HNIs and family offices. Once the rules are finalised, NRIs will enjoy a lower level of operational friction but they will still be subject to FEMA and account opening requirements. The proposals also present an opportunity for boutique managers and registered investment advisers to grow via the lower net-worth threshold.
Risk Analysis
The consultation paper is not law yet. Final regulations may vary. The USD 250,000 LRS limit for resident individuals and FEMA rules for NRIs continue to cap overseas investments. Client consent requirements and disclosure standards will be key to prevent inappropriate global or derivatives exposure. The 2.5 percent cap on the MF-PMS fee is above the typical direct mutual-fund expense ratios, and investors will have to decide if the professional overlay is worth the cost. Other points to watch are the concentration risk in a mutual fund-only portfolio and operational readiness of managers to execute cross-border.
Technical & Financial Data Matrix
Parameter
Current Rule
Proposed Change
Implication
Minimum investment (standard PMS)
₹50 lakh
Unchanged for standard; ₹25 lakh for MF-PMS
Wider access for mass-affluent
Manager net worth (MF-PMS)
₹5 crore
₹2 crore
Lower entry for new managers
MF-PMS investment universe
N/A
Direct MFs, ETFs, SIFs only
Simplified, lower-complexity product
Overseas securities
Not permitted
Listed equity, debt, overseas funds/REITs
Global diversification inside PMS
Unlisted debt (discretionary)
Restricted
Up to 10% of AUM (investment-grade)
Additional fixed-income flexibility
Derivatives exposure
Limited
Up to 1.25× AUM with sub-caps
Enhanced hedging and strategy tools
Industry AUM (May 2026)
₹42.61 lakh crore
—
Scale justifies regulatory refresh
Public comment deadline
—
13 August 2026
Short window for stakeholder input
Fee (MF-PMS)
Market practice
Cap 2.5% + performance fee option
Cost transparency
The matrix contains the quantifiable variations. The minimum ticket reduction is the most immediate change to accessibility; the overseas permission is the most strategically significant for sophisticated portfolios.”
After the data matrix a lot of narrative is needed before the second table. The category of MF-PMS as proposed is intentionally narrow. SEBI’s move to restrict the universe to direct mutual fund plans, ETFs and SIFs makes it a product that appears and feels more like a professionally managed fund-of-funds and less like the classic stock-picking PMS. This design decision simplifies the manager’s operational complexity and reduces the knowledge burden on the client. It also elaborates the relaxed infrastructure and qualification norms. The trade-off is obvious: investors get professional oversight and rebalancing at a lower entry point, but they forgo direct equity selection and the potential alpha that traditional discretionary PMS seeks to achieve.
The overseas securities proposal is designed to address a real asymmetry. An individual resident can already remit under LRS and buy foreign stocks or funds. A SEBI registered portfolio manager cannot execute the same trades within the PMS structure. Once the rules are notified, managers can construct globally diversified portfolios under one mandate subject to the hard LRS ceiling and FEMA. The practical benefit to NRIs will depend on how banks and custodians operationalise the consent and reporting requirements, but the regulatory direction is clear.
The flexibility of derivatives, combined with a limited window for unlisted debt, further aligns PMS with the tools already available to AIFs and sophisticated mutual fund strategies. The calibrated expansion is not an open-ended leverage permission, but rather explicit sub-caps and mandatory client consent for a 1.25x exposure limit. For managers that don’t have robust risk systems, the compliance cost will be material, and those who already run derivatives overlays will get cleaner regulatory cover.”
Finally, the short consultation window (comments due 13 August 2026) indicates that SEBI intends to move relatively fast. There is a short window for stakeholders to weigh in on the final language concerning NRI onboarding, the mechanics of LRS operations, or the precise meaning of “investment-grade” unlisted debt.
Generic Advice vs. Strategic Thinking Matrix
Decision Point
Generic Advice
Strategic Thinking
MF-PMS suitability
“Lower minimum is always better”
Evaluate whether professional MF allocation justifies 2.5% fee versus self-directed direct plans
Overseas allocation
“Now PMS can go global”
Model LRS headroom, currency hedging costs and custody arrangements before giving consent
Ticket size
“Wait for ₹25 lakh product”
Assess whether current ₹50 lakh PMS already fits; do not force a lower-ticket product if objectives require direct securities
Manager selection
“Any SEBI-registered manager is fine”
Scrutinise operational readiness for cross-border execution and derivatives risk systems
Timing
“Rules will change soon”
Use the consultation period to submit specific operational feedback if you manage or advise significant capital
Fee negotiation
“2.5% is the new standard”
Performance-fee or hybrid structures may align interests better for larger mandates
The strategic column forces explicit cost-benefit and operational analysis rather than headline reactions to lower minima or new asset classes.
Closing Analytical Frame
SEBI’s consultation paper dated July, 2026 is not incremental. It lowers the entry barrier for professional management at the same time as it expands the investment universe towards global and alternative instruments. The combination allows NRIs and HNIs to create regulated, multi-geography portfolios in a more transparent way. The proposals are still out for public comment and final notice. Investors and managers who view the paper as a set of complete rules will respond at the wrong time. When the final regulations are out, the people who will map out the precise implications for ticket size, overseas consent mechanics, fee drag and risk systems will be ready.
The immediate action point is the comment deadline of August 13, 2026. Then the industry will be moving from consultation to implementation.
FAQs
What is the proposed minimum investment for the new MF-only PMS?
SEBI has said that for the Mutual Fund-only PMS category, the minimum investment by the client has been proposed at ₹25 lakh, as against ₹50 lakh currently applicable for standard PMS. The category covers only direct plans of mutual funds, ETFs and Specialised Investment Funds.
Will portfolio managers be allowed to invest in foreign securities?
Yes . The consultation paper proposes to allow investments in listed equities, listed debt securities, overseas mutual funds or unit trusts investing in listed securities and overseas-listed REITs. All such investments are subject to limits of the FEMA and LRS and require explicit positive client consent.
What is the net-worth requirement for MF-PMS applicants?
The proposed minimum net worth for entities seeking registration as MF-PMS is ₹2 crore as against the existing ₹5 crore prescribed for regular portfolio managers.
Can discretionary PMS invest in unlisted debt under the proposals?
Discretionary portfolio managers may be allowed to invest up to 10 percent of a client’s assets under management in investment-grade unlisted debt securities.
What derivatives exposure is proposed?
Total exposure to exchange-traded derivatives could be permitted up to 1.25 times client AUM with client consent, with unhedged short equity-derivative exposure limited to 50 percent of AUM and options premium exposure limited to 10 percent of AUM.
When does the public comment period close?
Public comments on the consultation paper are invited until 13 August 2026.
How large is the PMS industry currently?
As of 31 May 2026, PMS assets under management stood at ₹42.61 lakh crore, with 515 registered portfolio managers and approximately 2.19 lakh clients.
How can WealthMunshi help HNIs and NRIs navigate the SEBI PMS changes?
As the rules move from consultation to final form, WealthMunshi, offering regulatory impact analysis, portfolio construction modelling under the proposed MF-PMS and overseas frameworks and multi-jurisdiction compliance support, enables clients to assess suitability, fee drag and global allocation options.
The consultation closes on 13 August 2026. Compare your current allocation to the proposed MF-PMS ticket size, overseas consent mechanics and fee structure. Request a Regulatory Impact Briefing to align your portfolio with the final regulations.
GIFT City Funds
SEBI PMS Overhaul 2026: MF-PMS & Global Access
On 23 July 2026 the Securities and Exchange Board of India released a public consultation paper that could redefine how affluent and mass-affluent investors access professional portfolio management. The paper proposes the largest rewrite of the Portfolio Managers Regulations since 2020. Two ideas that are of immediate interest to NRIs and HNIs are at its core — a mutual-fund-only PMS exclusively for them with an entry ticket of Rs 25 lakh and explicit permission to portfolio managers to invest client money in overseas securities.
The structural gap was created by the ₹50 lakh minimum and the inability of PMS managers to buy foreign securities for years. Under the Liberalised Remittance Scheme, resident Indians could invest abroad by themselves, but a regulated portfolio manager could not do so on their behalf. Onboarding was more frictionful for NRIs. The July 2026 proposals aim at both constraints simultaneously.
Quick Answer Box
What has SEBI proposed?
New MF only PMS category (minimum ₹25 lakh, net worth ₹2 crore for manager, fee cap 2.5 percent) Permission to invest in overseas listed equity and debt, to-be-listed securities, limited unlisted debt and higher derivatives flexibility. The public’s comments are due on 13 August 2026.
Who benefits most?
Mass affluent investors seeking professional management without the need to pick individual stocks, and HNIs/NRIs seeking global diversification within a SEBI regulated PMS structure.
Current industry size: ₹ 42.61 lakh crore AUM and 515 registered portfolio managers (as on 31 May 2026)
Macro Trend Analysis: Why SEBI Is Moving Now
Assets under PMS more than doubled from ₹18.07 lakh crore in April 2019 to ₹42.61 lakh crore by May 2026. The number of registered portfolio managers increased from 226 in 2020 to 515. The client base was approximately 2.19 lakh. This growth was accomplished under rules designed for a smaller, more homogeneous HNI segment. Investor sophistication, demand for customised solutions and the rise of global allocation preferences have outpaced the 2020 framework.
Meanwhile, mutual funds, AIFs and IFSC-based managers already have wider foreign access. The asymmetry of regulation came more and more to the fore. So, SEBI’s paper is about democratisation (lower ticket via MF-PMS) and parity (overseas securities and expanded domestic instruments).
Regulatory Impacts: Core Proposals in Detail
Mutual Fund-only PMS (MF-PMS)
A separate registration category limited to direct plans of mutual funds, ETFs and Specialised Investment Funds. Minimum client investment dips to ₹25 lakh. Criteria for net worth of applicants reduced to ₹2 crore. Management fee capped at 2.5 percent of AUM. Performance or hybrid fees allowed with client consent. There will not be double charging as exit-load provisions applicable to conventional PMS will not be applicable. The requirements for dealing room and other staff are relaxed. Mutual-fund distributors can do MF-PMS business with a strict segregation of activities and clients.
Overseas securities
Portfolio managers may invest client funds in listed foreign equities, listed foreign debt, overseas mutual funds or unit trusts investing in listed securities and overseas-listed REITs. All such investments are subject to FEMA and Liberalised Remittance Scheme . The client must give clear, positive consent. This single change closes a long standing gap between what an individual could do under LRS and what a regulated manager could do on behalf of the client.
Additional investment flexibility
Ease-of-doing-business measures
Digital disclosure documents, longer filing windows, demat account portability on switching managers, removal of mandatory power of attorney requirement (with safeguards), framework for independent fund managers working on a registered portfolio manager platform.
Market Segment Impacts
The ₹25 lakh MF-PMS now provides a regulated, professionally advised and managed route for mass-affluent investors, which was earlier behind a ₹50 lakh wall. Today, many investors in the ₹25-50 lakh range are managing their own mutual-fund portfolios or are relying on advisory relationships that don’t have full discretion. The MF-PMS formalises that relationship under a SEBI framework.
The overseas-securities allowance and the limited unlisted-debt window opens up the palette for real multi-asset, multi-geography construction for HNIs and family offices. Once the rules are finalised, NRIs will enjoy a lower level of operational friction but they will still be subject to FEMA and account opening requirements. The proposals also present an opportunity for boutique managers and registered investment advisers to grow via the lower net-worth threshold.
Risk Analysis
The consultation paper is not law yet. Final regulations may vary. The USD 250,000 LRS limit for resident individuals and FEMA rules for NRIs continue to cap overseas investments. Client consent requirements and disclosure standards will be key to prevent inappropriate global or derivatives exposure. The 2.5 percent cap on the MF-PMS fee is above the typical direct mutual-fund expense ratios, and investors will have to decide if the professional overlay is worth the cost. Other points to watch are the concentration risk in a mutual fund-only portfolio and operational readiness of managers to execute cross-border.
Technical & Financial Data Matrix
The matrix contains the quantifiable variations. The minimum ticket reduction is the most immediate change to accessibility; the overseas permission is the most strategically significant for sophisticated portfolios.”
After the data matrix a lot of narrative is needed before the second table. The category of MF-PMS as proposed is intentionally narrow. SEBI’s move to restrict the universe to direct mutual fund plans, ETFs and SIFs makes it a product that appears and feels more like a professionally managed fund-of-funds and less like the classic stock-picking PMS. This design decision simplifies the manager’s operational complexity and reduces the knowledge burden on the client. It also elaborates the relaxed infrastructure and qualification norms. The trade-off is obvious: investors get professional oversight and rebalancing at a lower entry point, but they forgo direct equity selection and the potential alpha that traditional discretionary PMS seeks to achieve.
The overseas securities proposal is designed to address a real asymmetry. An individual resident can already remit under LRS and buy foreign stocks or funds. A SEBI registered portfolio manager cannot execute the same trades within the PMS structure. Once the rules are notified, managers can construct globally diversified portfolios under one mandate subject to the hard LRS ceiling and FEMA. The practical benefit to NRIs will depend on how banks and custodians operationalise the consent and reporting requirements, but the regulatory direction is clear.
The flexibility of derivatives, combined with a limited window for unlisted debt, further aligns PMS with the tools already available to AIFs and sophisticated mutual fund strategies. The calibrated expansion is not an open-ended leverage permission, but rather explicit sub-caps and mandatory client consent for a 1.25x exposure limit. For managers that don’t have robust risk systems, the compliance cost will be material, and those who already run derivatives overlays will get cleaner regulatory cover.”
Finally, the short consultation window (comments due 13 August 2026) indicates that SEBI intends to move relatively fast. There is a short window for stakeholders to weigh in on the final language concerning NRI onboarding, the mechanics of LRS operations, or the precise meaning of “investment-grade” unlisted debt.
Generic Advice vs. Strategic Thinking Matrix
The strategic column forces explicit cost-benefit and operational analysis rather than headline reactions to lower minima or new asset classes.
Closing Analytical Frame
SEBI’s consultation paper dated July, 2026 is not incremental. It lowers the entry barrier for professional management at the same time as it expands the investment universe towards global and alternative instruments. The combination allows NRIs and HNIs to create regulated, multi-geography portfolios in a more transparent way. The proposals are still out for public comment and final notice. Investors and managers who view the paper as a set of complete rules will respond at the wrong time. When the final regulations are out, the people who will map out the precise implications for ticket size, overseas consent mechanics, fee drag and risk systems will be ready.
The immediate action point is the comment deadline of August 13, 2026. Then the industry will be moving from consultation to implementation.
FAQs
What is the proposed minimum investment for the new MF-only PMS?
SEBI has said that for the Mutual Fund-only PMS category, the minimum investment by the client has been proposed at ₹25 lakh, as against ₹50 lakh currently applicable for standard PMS. The category covers only direct plans of mutual funds, ETFs and Specialised Investment Funds.
Will portfolio managers be allowed to invest in foreign securities?
Yes . The consultation paper proposes to allow investments in listed equities, listed debt securities, overseas mutual funds or unit trusts investing in listed securities and overseas-listed REITs. All such investments are subject to limits of the FEMA and LRS and require explicit positive client consent.
What is the net-worth requirement for MF-PMS applicants?
The proposed minimum net worth for entities seeking registration as MF-PMS is ₹2 crore as against the existing ₹5 crore prescribed for regular portfolio managers.
Can discretionary PMS invest in unlisted debt under the proposals?
Discretionary portfolio managers may be allowed to invest up to 10 percent of a client’s assets under management in investment-grade unlisted debt securities.
What derivatives exposure is proposed?
Total exposure to exchange-traded derivatives could be permitted up to 1.25 times client AUM with client consent, with unhedged short equity-derivative exposure limited to 50 percent of AUM and options premium exposure limited to 10 percent of AUM.
When does the public comment period close?
Public comments on the consultation paper are invited until 13 August 2026.
How large is the PMS industry currently?
As of 31 May 2026, PMS assets under management stood at ₹42.61 lakh crore, with 515 registered portfolio managers and approximately 2.19 lakh clients.
How can WealthMunshi help HNIs and NRIs navigate the SEBI PMS changes?
As the rules move from consultation to final form, WealthMunshi, offering regulatory impact analysis, portfolio construction modelling under the proposed MF-PMS and overseas frameworks and multi-jurisdiction compliance support, enables clients to assess suitability, fee drag and global allocation options.
The consultation closes on 13 August 2026. Compare your current allocation to the proposed MF-PMS ticket size, overseas consent mechanics and fee structure. Request a Regulatory Impact Briefing to align your portfolio with the final regulations.
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