Securities and Exchange Board of India (SEBI) has set out proposals to broaden what portfolio managers can buy, including overseas listed shares and bonds, securities that are yet to be listed, and unlisted debt.
The draft changes would also relax some operating rules for the industry.
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The review follows strong growth in India’s portfolio management services industry. Assets under management stood at Rs42.61tn ($441.22bn) on 31 May 2026.
One proposal is for a new type of portfolio manager restricted to exchange-traded funds, mutual fund schemes and specialised investment funds intended for wealthier investors who fall short of the usual investment cut-off but can accept more risk than retail clients.
The SEBI said the minimum ticket size for clients in this category would be cut by half to Rs2.5m.
The required net worth for these managers could also be lowered to Rs20m.
The regulator has further suggested allowing derivatives exposure of up to 1.25 times client assets.
Another idea under consideration is a structure in which independent fund managers function through a registered platform, while the registered portfolio manager remains accountable for compliance and regulatory obligations.
In a separate proposal, portfolio managers with less than Rs1bn in assets would be exempt from maintaining a dedicated dealing room.
SEBI has also suggested permitting 10% of client money to be allocated to unlisted debt, an area that is currently barred.
The proposed amendments to the portfolio management framework are intended to widen investment options for the industry, reduce compliance burden, bring rules together and simplify the language of the regulations.
Comments on the proposals have been sought until 13 August.
In a statement, the regulator said: “Considering the increasing sophistication of investors, growing demand for more personalised solutions and diverse investment portfolio, a need was felt to review the PM Regulations.”
“Hence, SEBI undertook the exercise of comprehensive review to ensure that Regulations remain aligned with changing industry dynamics.”
