SEBI Plans Review Of PMS Regulations, Targets Stronger Governance And Oversight

The Securities and Exchange Board of India is preparing to revisit the SEBI Portfolio Managers Regulations, 2020.

The review will assess whether the existing regulatory framework remains effective and relevant.
SEBI Chairman Tuhin Kanta Pandey said the regulator has begun work on the review. He said the exercise is intended to ensure that PMS regulations remain adaptable to evolving market structures.

The proposals may be taken up at the regulator’s board meeting scheduled for June 2026. SEBI plans to issue a consultation paper as part of the process. Feedback will be sought from industry participants before final proposals are framed.

Governance And Conduct Focus

SEBI has flagged the need for stronger governance and conduct standards in the PMS industry. The regulator has indicated that regulatory rules alone are insufficient to ensure market discipline. Pandey said the industry must focus on governance practices and internal controls.

He highlighted the importance of clear segregation of roles across business units. Staffing discipline and documentation standards were also emphasised. The regulator has also pointed to investor suitability as a key area of concern.

SEBI said risk profiling, suitability assessment, and client communication must be clear and evidence-based. Distributor conduct will form part of the review. The regulator said the industry must guard against mis-selling practices.

Industry Growth Context

The PMS segment has recorded steady expansion over recent years. As of January 2026, the industry had around 2.15 lakh clients.

Assets under management, excluding Employees’ Provident Fund Organisation and provident fund assets, stood at about ₹10.5 trillion. This compares with approximately ₹5 trillion in FY21.

The growth represents a compounded annual growth rate of around 17%. The number of registered portfolio managers has also increased during the period. Distributor reach has widened, reflecting broader participation in the segment.

Broader Regulatory Agenda

The PMS review will form part of SEBI’s wider regulatory overhaul. Other areas under review include settlement regulations, takeover norms, and listing obligations and disclosure requirements.

Separately, SEBI is examining the feasibility of an exchange-based mechanism for pre-initial public offering trading. The proposal would be limited to companies that are in the process of being listed.

The regulator said its jurisdiction is clearer in the ‘to-be-listed’ segment. SEBI is working on the operational framework for such a mechanism.

A consultation paper on the proposal will be issued in due course. Pandey also said the regulator is engaging with relevant government ministries on the continued ban on trading in certain agricultural commodities.