SEBI Notifies Portfolio Managers Regulations, 2026 to Replace the 2020 Regulations, Effective April 01, 2027: A Regulatory Update

Introduction

The Securities and Exchange Board of India (“SEBI”) has notified a comprehensive overhaul of the framework governing portfolio managers, with effect from April 1, 2027. At its 215th meeting held on September 24, 2026 (Press Release No. 59/2026), the SEBI Board approved the SEBI (Portfolio Managers) Regulations, 2026 (the “2026 Regulations”), in supersession of the SEBI (Portfolio Managers) Regulations, 2020 (the “2020 Regulations”). The proposal follows a stakeholder survey conducted through the Association of Portfolio Managers in India, and a consultation paper and draft regulations issued by SEBI on July 23, 2026. The 2026 Regulations were thereafter notified on October 7, 2026 (Notification No. SEBI/LAD-DOP/2026/322) and come into force on April 1, 2027, replacing the 2020 Regulations from that date.

Explanation

A key change is the widening of the universe of securities in which portfolio managers may invest. The 2026 Regulations will permit portfolio managers to invest in initial public offerings and primary market debt issuances. SEBI’s press release also states that, under discretionary portfolio management services, up to 10% of client assets under management may be placed in investment-grade, non-convertible, unlisted debt securities, with client consent.

The 2026 Regulations also introduce the Portfolio Managers Route for Investing in Mutual Fund units (“PRIM”). It will allow portfolio managers to invest client funds in direct plans of mutual funds, including ETFs, index funds and Specialized Investment Funds of Indian asset management companies. Secondary sources report a minimum ticket size of ₹25 lakh for PRIM as a distinct strategy.

A further structural change is the introduction of Independent Fund Managers, who may manage client portfolios in association with registered portfolio managers. The registered portfolio manager retains full responsibility and liability for all activities of the Independent Fund Manager.

On compliance, graduates will become eligible to act as principal officers of portfolio managers, and the dealing-room requirement will be relaxed for portfolio managers with assets under management below ₹100 crore. SEBI notes that this relaxation would cover about 48% of the portfolio managers registered as on the date of its press release. According to SEBI, through consolidation and the removal of redundant provisions, the text of the regulations has been reduced from 70 pages to 33 pages (a reduction of about 53%) in the draft placed before the Board.

It is important to note that notification is not the same as the 2026 Regulations being in force. The 2026 Regulations came into force only on April 1, 2027, not on the date of notification. Certain limits and operational details may be specified by SEBI separately, and transition provisions may apply to existing portfolio managers. Existing portfolio managers should therefore not restructure mandates or strategies on the strength of the press release alone and should instead rely on the notified text and any circulars issued by SEBI.

Conclusion

The 2026 Regulations will broaden the investment options available to portfolio managers, introduce new product and service routes through PRIM and Independent Fund Managers, and lower the compliance burden for smaller entities. Several limits and conditions, including the cap on unlisted debt and the minimum ticket size for PRIM, will shape how much of this flexibility can be used in practice. Portfolio managers and their advisers should review the notified text of the 2026 Regulations, any circulars issued by SEBI under them and the transition provisions ahead of the April 1, 2027 commencement, and before making any changes to their operations.

Last Updated on 30 October, 2026