SEBI Board approves Portfolio Managers Regulations, 2026: IPO investing, a ₹25 lakh mutual fund route (PRIM) and Independent Fund Managers

A replacement, not an amendment

At its meeting on 24 September 2026 the SEBI Board approved the proposal to introduce the SEBI (Portfolio Managers) Regulations, 2026 in supersession of the SEBI (Portfolio Managers) Regulations, 2020. The stated objectives are development of the Portfolio Management Services (PMS) industry, ease of compliance, consolidation and simpler language, and removal of redundant provisions.

Where client money may now go

• IPOs, and primary market issuance in the debt market.
• Investment-grade, non-convertible, unlisted debt securities — up to 10% of client Asset Under Management (AUM) under Discretionary PMS, with client consent.
• Exchange traded derivatives, up to 1.25 times the client’s AUM.
• Foreign securities under both Discretionary and Non-Discretionary PMS: listed equity, debt, REITs, overseas mutual funds, ETFs, index funds and foreign government debt, governed under the Foreign Exchange Management Act, 1999 and RBI’s Liberalized Remittance Scheme.

Eligible Fund Managers are permitted to manage and advise investment of an eligible investment fund in overseas securities. Where such a fund invests in Indian securities, the investment limit stays aligned with the prevailing FPI framework.

PRIM: the mutual fund route

The Portfolio Managers Route for Investing in Mutual Fund units (PRIM) lets a portfolio manager invest clients’ funds in direct plans of mutual funds, including ETFs, index funds and Specialized Investment Funds of Indian asset management companies. An existing portfolio manager can offer it as a separate investment approach with a minimum ticket size of ₹25 lakh. An applicant that will operate only within PRIM securities may take a new registration on these terms:

Independent Fund Managers

An Independent Fund Manager (IFM) will manage client portfolios in association with a registered portfolio manager. The safeguards listed in the release:

• the registered portfolio manager has full responsibility and liability for all activities of the IFM;
• an IFM needs the same qualifications, experience and certifications as a Principal Officer;
• fees are paid directly to the registered portfolio manager, and IFM orders flow through the portfolio manager’s infrastructure;
• a portfolio manager may affiliate with several IFMs, but an IFM can work under only one at a time;
• clients get a mandatory exit option if an IFM leaves or is terminated;
• APMI will maintain a central database of active IFMs.

Compliance made lighter

• A graduate will be eligible to be Principal Officer.
• Dealing room requirement relaxed for portfolio managers with AUM below ₹100 crore — 48% of those registered, by SEBI’s count.
• A standardized Investment Management Agreement, with authority to operate the demat and trading account built in. The Power of Attorney for the bank account, as mandated by RBI, continues.
• Harmonized reporting timelines and a digital disclosure document.
• Statutory levies kept out of the operating expenses limit of 0.5% a year.

The regulations fall from 70 pages to 33, and from 19,486 words to 11,308. Provisos drop from 47 to 4.

What portfolio managers should do

The draft went out for public comment with a consultation paper on 23 July 2026, and the Board has now approved it. The release gives no date of notification, so agreements, fee structures and investment approaches should be reworked against the notified text.