Sebi Chairman Tuhin Kanta Pandey proposes overhaul of PMS regulations

Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey on Monday proposed a comprehensive review of the Sebi (Portfolio Managers) Regulations, 2020, to keep the framework effective, adaptable, and aligned with evolving market dynamics.

Pandey said that the regulator’s approach has been one of "Optimum Regulation," easing unnecessary frictions while strengthening investor protection.

Speaking at a PMS conclave, he said that regulation alone cannot build a strong industry. He added how the real strength of PMS comes from what PMS firms do daily, in terms of their governance, suitability, technology, and conduct.

He emphasised that the governance standards must rise with scale as a starting point. "As PMS, you manage concentrated, high-stakes portfolios. This requires strong internal controls, clear segregation across business units, disciplined documentation, and staffing that matches the scale and complexity of the business," the Sebi chief said.

He also advocated for investor suitability, which he said remains at the heart of the PMS operations. Risk profiling, suitability assessment, and client communication must be clear, consistent, and evidence-based as part of the PMS strategy, Pandey said.

He also lauded the Association of Portfolio Managers in India (APMI), saying that the industry association has become a bridge between Sebi and the industry, helping standardise practices and promote transparency.

"Your work on developing a central repository of Sebi circulars and communications and in ensuring data integrity for SEBI’s off-site supervision has been commendable," Pandey said, adding that APMI should work on positioning PMS as the preferred choice for informed investors going forward.

The Chairman said the PMS industry has seen strong growth with non-EPFO/PF AUM rising from about Rs 5 lakh crore in FY21 to about Rs 10.5 lakh crore as of January 31, 2026, implying a CAGR of 17%.

Meanwhile, total clients, as of January 31, 2026, stood at about 2.15 lakh, an almost 50% increase from 2022. The number of registered portfolio managers also increased from 361 to 501 over the same broad period.

The distributor network comprises over 7,000 individual registrations added in FY26.

Sebi has undertaken measures to promote ease of doing business, such as streamlining digital onboarding and simplifying disclosure documents. The regulator has also issued uniform guidelines on how portfolio managers must handle the inflow and outflow of client assets.

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