SEBI: Portfolio Managers Regulations take effect 1 April 2027
SEBI has notified its 2026 portfolio manager framework, effective 1 April 2027, covering registration, financial requirements, client obligations and the PRIM mutual fund route.
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The Securities and Exchange Board of India (SEBI) has notified the Portfolio Managers Regulations, 2026, setting 1 April 2027 as the commencement date for its framework governing registration, operations and responsibilities. The notification is dated 7 October 2026 and appears in the Gazette of India issue dated 8 October 2026. Publication does not bring the regulations into force immediately. [1]
The framework includes the Portfolio Management Service Route for Investment in Mutual Fund units, or PRIM, as a distinct investment approach governed by Chapter VI. According to Outlook Money’s account of the regulations, this route will have a minimum client investment of Rs 25 lakh, compared with the Rs 50 lakh baseline for standard portfolio management services. [1][2]
For firms seeking registration, the regulations specify an application process, an opportunity to correct incomplete applications and payment deadlines. They also define who takes responsibility for investment decisions and how the manager’s financial resources are calculated. [1][3]
Registration includes time to correct an application
Under Regulation 3, an entity intending to act as a portfolio manager must apply to SEBI in the prescribed form and pay a non-refundable application fee specified in the First Schedule. SEBI may seek further information or clarification relevant to the applicant’s portfolio management activities. [1]
An incomplete application can be rejected, but not without an opportunity to address SEBI’s objections. The applicant must receive at least 30 calendar days to make the required corrections, according to Regulation 3. [1]
The notification text published by TaxGuru sets out the subsequent steps. Once SEBI is satisfied that the applicant meets the requirements under Regulation 4, it will send an intimation. The applicant then has 30 calendar days from receiving that communication to pay the registration fee. [3]
SEBI may grant the certificate after receiving the fee. Under Regulation 3, the certificate remains valid unless SEBI suspends or cancels it. The initial application fee and the registration fee are separate stages of the process. [3]
Financial requirements distinguish PRIM from other services
Outlook Money reports that general portfolio managers must maintain minimum net worth of Rs 5 crore, while applicants registered exclusively for PRIM face a Rs 2 crore requirement. These are financial requirements for the manager, separate from the amount a client must invest. [2]
The Gazette notification defines net worth through a calculation rather than simply referring to cash or the firm’s stated capital. It includes paid-up equity capital, the securities premium account and free reserves, but excludes reserves created by revaluing assets. Accumulated losses, specified expenditure not written off, and loans and advances made by the manager must be deducted. [1]
The deduction expressly includes loans and advances to related parties or associates. Under this definition, amounts lent by a manager cannot also count towards its regulatory net worth. [1]
Regulation 4, as published by TaxGuru, requires at least 10 per cent of the minimum net worth requirement to be deployed in unencumbered liquid assets: assets free of claims or charges. The listed instruments include cash, deposits with scheduled commercial banks, government securities, treasury bills, and units of liquid and overnight mutual fund schemes. [3]
Outlook Money reports that existing managers have a 12-month transition period to meet that liquidity requirement. The requirement concerns a portion of the prescribed minimum net worth, not the entire balance sheet. [2][3]
The contract determines who controls investments
The Gazette notification distinguishes discretionary management from non-discretionary management by who makes investment decisions. A discretionary manager exercises, or may exercise, complete discretion under the client contract. A non-discretionary manager manages the client’s funds and securities according to the client’s directions. [1]
The investment agreement is defined as a legally binding contract setting out the relationship, mutual rights, liabilities, obligations and authority over portfolio management. Its terms remain subject to the regulations; an agreement does not displace regulatory requirements. [1]
The notification also assigns responsibility to a designated principal officer. That employee is responsible both for the manager’s decisions concerning client portfolios or funds and for its other operations. [1]
Specialised arrangements receive separate definitions. A co-investment portfolio manager manages a Category I or Category II Alternative Investment Fund and serves investors in such funds, investing in unlisted securities of companies in which those funds invest. The definition also permits services to investors in other qualifying funds managed by the same manager and sharing the same sponsors. [1]
Review followed expansion in the industry
SEBI’s consultation paper on the comprehensive review described a larger portfolio management industry and demand for more personalised investment services. It put assets under management, meaning the value managed for clients, at Rs 42.61 lakh crore on 31 May 2026, against Rs 18.07 lakh crore in April 2019. [4]
The same paper reported 2.19 lakh clients on 31 May 2026, compared with 1.5 lakh in April 2019. It counted 515 portfolio managers on 31 May 2026, against 226 in 2020. These are the consultation paper’s dated industry figures, not October totals. [4]
SEBI said the review sought to expand investment avenues, ease compliance, consolidate provisions, simplify language and remove redundant requirements. The consultation proposed a mutual-fund-only service with lower entry thresholds, alongside proposals concerning foreign securities, unlisted debt and derivatives. Those consultation proposals were requests for public comment, distinct from the notified regulations. [4]
On client-facing obligations under the notified framework, Outlook Money reports that upfront fees are prohibited and mutual fund investments must use direct plans, without distribution-related fees charged to clients. It also reports that portfolio managers must resolve client grievances within 21 calendar days. [2]
References
[1] Securities and Exchange Board of India, Portfolio Managers Regulations, 2026. Notification dated 7 October 2026; Gazette of India issue dated 8 October 2026. egazette.gov.in
[2] Outlook Money, reporting on SEBI’s Portfolio Managers Regulations, 2026 and advertising rules. outlookmoney.com
[3] TaxGuru, SEBI Portfolio Managers Regulations 2026: New Framework from April 2027, including notification text. taxguru.in
[4] Securities and Exchange Board of India, Consultation Paper on Comprehensive Review of SEBI (Portfolio Managers) Regulations, 2020. sebi.gov.in
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References
- REGD. No. D. L.-33004/99. egazette.gov.in. https://egazette.gov.in/WriteReadData/2026/277012.pdf. Retrieved 20 October 2026.
- CONSULTATION PAPER ON COMPREHENSIVE REVIEW OF SEBI (PORTFOLIO MANAGERS . sebi.gov.in. https://www.sebi.gov.in/sebi_data/attachdocs/jul-2026/1784803038906.pdf. Retrieved 20 October 2026.
- Securities Market Investment: Portfolio Management Services | SEBI . investor.sebi.gov.in. https://investor.sebi.gov.in/pms_final.html. Retrieved 20 October 2026.
- SEBI Portfolio Managers Regulations 2026: New Framework from April 2027. taxguru.in. https://taxguru.in/sebi/sebi-portfolio-managers-regulations-2026-framework-april-2027.html. Retrieved 20 October 2026.
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