SEBI Keeps ₹50 Lakh PMS Minimum, Adds ₹25 Lakh PRIM Route and IPO Access From April 2027

The Securities and Exchange Board of India (SEBI) has notified the Portfolio Managers Regulations, 2026, which take effect on 1 April 2027. The rules keep the ₹50 lakh minimum for standard discretionary portfolio management services (PMS), add a ₹25 lakh route called PRIM, and allow portfolio managers to invest in initial public offerings (IPOs).

The notification date is reported differently. Business Today gives 7 October 2026, while 5paisa gives 12 October 2026, and a SEBI regulation-watch page from finin2min refers to an instrument dated 12 October. For investors, the regulations add a ₹25 lakh entry route, change the instruments a manager may buy and set the net worth a manager must hold.

The regulations replace the 2020 rules. According to a TaxGuru summary of the SEBI board memorandum, the aims are to develop the portfolio management industry, ease compliance, consolidate requirements, simplify drafting and remove redundant provisions.

The ₹50 Lakh Minimum and the Accredited Investor Exemption

A manager may not accept funds or securities worth less than ₹50 lakh per client for a standard PMS account. Business Today reports that the figure is unchanged under the new rules, and the TaxGuru text of the regulations sets the same ₹50 lakh minimum.

Accredited investors are exempt from that minimum. Business Today reports that the exemption is subject to prescribed disclosures and to the terms agreed between the investor and the manager.

The accredited investor definition refers to regulation 2(1)(ab) of the SEBI (Alternative Investment Funds) Regulations, 2012. TaxCorp also reports a separate category, large value accredited investors, for an investor who signs an agreement with the manager for a minimum investment of ₹10 crore.

For an ordinary client of a standard PMS account, the entry point is therefore the ₹50 lakh threshold. For an accredited investor, the entry point depends on the disclosures and the agreement with the manager.

The PRIM Route at ₹25 Lakh

The Portfolio Management Service Route for Investment in Mutual Fund units, known as PRIM, requires at least ₹25 lakh per client. PRIM gives a ₹25 lakh entry point to a portfolio that holds mutual fund units. Business Today and 5paisa both give that figure.

Under PRIM, the manager invests in the direct plans of mutual funds. 5paisa lists exchange-traded funds, index funds and Specialised Investment Funds (SIFs) as the investment universe, and describes the route as one in which a registered manager makes the fund-selection and allocation decisions.

The TaxGuru summary of the board memorandum describes a proposed PRIM route for investment exclusively in mutual fund units, with a reduced minimum ticket size and modified capital and staffing requirements. The memorandum text on the same page says the PRIM net worth threshold was proposed to be lowered from ₹5 crore to ₹2 crore.

Existing portfolio managers may offer PRIM alongside conventional services, according to 5paisa. Entities seeking to operate only within the PRIM universe may seek registration under it, and that registration carries its own net worth threshold.

IPOs, Unlisted Debt and Derivatives

The regulations allow portfolio managers to invest in IPOs and other primary market issues. The regulation text on TaxGuru lists initial public offers for equity and primary market issues for debt among the investments portfolio managers may make. The TaxGuru summary of the board memorandum says the proposal would allow IPO participation.

For discretionary PMS, the board memorandum proposes allowing exposure of up to 10% of client assets under management (AUM) to unlisted debt, limited to investment-grade paper, according to the TaxGuru summary. That figure comes from the proposal stage and has not been confirmed for the notified rules.

Exchange-traded derivatives exposure is proposed to be capped at 1.25 times client AUM, and only with explicit client consent, according to the same summary. The regulation text on TaxGuru permits exchange-traded derivative instruments subject to limits and conditions the Board specifies from time to time. Whether the final cap matches the proposal has not been confirmed.

The regulations take effect on 1 April 2027, so these permissions start on that date.

Net Worth, Fees and Client Safeguards

A general portfolio manager must hold a minimum net worth of ₹5 crore, and a manager registered exclusively for PRIM needs ₹2 crore, a figure 5paisa also reports. Both must keep at least 10% of the minimum net worth in unencumbered liquid assets, such as cash, bank deposits, money market instruments, government securities and liquid mutual funds. For a ₹5 crore manager, that buffer is ₹50 lakh; for a ₹2 crore PRIM-only manager, it is ₹20 lakh.

Business Today reports that managers cannot charge upfront fees, directly or indirectly. Permitted fee models include fixed fees, return-based fees, or a combination of the two. The TaxGuru summary also gives a proposed cap of 1% of client AUM on management fees for PRIM, down from 2.5% in an earlier proposal.

Investor grievances must be addressed within 21 calendar days of receipt, according to Business Today. The regulations also require managers to appoint a principal officer and a compliance officer.

Disclosure documents must be certified by an independent chartered accountant, and a copy must be filed with the Board after registration and every year within six months of the financial year's end. Clients must receive periodic reports at intervals agreed in the contract, not exceeding three months.

PRIM gives a ₹25 lakh entry point to a portfolio that holds mutual fund units.

Timeline, Transition and Industry Size

5paisa reports that SEBI's board approved the proposal at its meeting on 24 September 2026. The regulations were then notified in October, on 7 or 12 October depending on the report.

Existing managers get transition periods that differ by requirement. Outlook Money reports 12 months for existing managers to meet the 10% liquidity buffer. The regulation text gives 12 months for existing client investments to meet the ₹50 lakh minimum, and 36 months for investments made before the 2020 regulations to meet certain investment restrictions.

The memorandum summary gives industry AUM of ₹18.07 lakh crore in April 2019 and ₹44.10 lakh crore in July 2026, presented as industry context for the new rules. The regulations take effect on 1 April 2027.

How PMS Compares With Mutual Funds and AIFs

A conventional PMS account takes funds or securities from a client, subject to the ₹50 lakh minimum. A PRIM account invests the manager's selections in mutual fund units through direct plans, subject to the ₹25 lakh minimum. The main differences are the entry amount, the holdings a manager may use and the net worth each manager must hold.

The accredited investor exemption draws on the definition in the SEBI (Alternative Investment Funds) Regulations, 2012, so the PMS rules and the AIF rules use the same investor category.

The PRIM route links PMS to mutual funds. The TaxGuru summary says the proposed PRIM route carries modified capital and staffing requirements, which is one of the features the memorandum highlights for that route.