Summary of this article
Sebi chairman Tuhin Kanta Pandey said the work on PMS regulations overhaul is undergoing
The regulator is tentatively looking at June as a timeline and will release a consultation paper soon
India's PMS industry grew at a 17% CAGR over the past five years
The Securities and Exchange Board of India (Sebi) is planning to review regulatory framework that governs the Portfolio Management Services (PMS) industry, said chairman Tuhin Kanta Pandey while speaking at the Portfolio Managers’ Conclave in Mumbai on February 23, 2026.
The work has already started, Pandey said, adding that the regulator is tentatively looking at June as a timeline. He also said that Sebi will first float a consultation paper to seek public and industry feedback and hold discussions with various industry committees, before placing the final proposals before its board, as per media reports.
“We propose to carry out a comprehensive review of the Sebi (Portfolio Managers) Regulations, 2020, so that the framework remains effective, adaptable, and aligned with evolving market dynamics,” the Sebi chairman said at the conclave organised in collaboration with the National Institute of Securities Markets (NISM) and the Association of Portfolio Managers in India (APMI).
Building A Strong PMS Ecosystem
Stressing that regulations alone cannot build a strong PMS ecosystem, Pandey said the industry’s real strength will depend on everyday practices within firms. “But regulation alone cannot build a strong industry. The real strength of PMS will come from what firms do every day - in governance, suitability, technology and conduct.”
He then laid out three areas that, in his view, require sustained attention from the industry.
First, on governance, Pandey said standards must evolve as the business grows in scale and complexity.
“Governance standards must rise with scale. As PMS, you manage concentrated, high-stakes portfolios. This requires strong internal controls, clear segregation across business units, disciplined documentation, with staffing that matches scale and complexity of business.”
Second, he stressed that client suitability should remain the cornerstone of PMS offerings, rather than an afterthought. “Investor suitability must remain at the core. A PMS strategy is good only if it is suitable for that investor. Risk profiling, suitability assessment, and client communication must be clear, consistent, and evidence-based. Going ahead, PMS distributor conduct matters - the industry must guard against mis-selling.”
Third, on technology, he cautioned firms to adopt digital tools responsibly while keeping risk management firmly in place.
“Third, use technology with responsibility. Audit your technology service providers. Your vendor contracts must have strong risk mitigation and data privacy clauses. Do not forget business continuity - investors should not face denial of service.”
India’s PMS Industry’s Growth
The PMS industry’s assets under management (AUM), excluding EPFO and provident fund money, have risen from about Rs 5 lakh crore in FY21 to nearly Rs 10.50 lakh crore as of January 31, 2026, as shared by Pandey. This translates into a compound annual growth rate (CAGR) of around 17 per cent.
Client numbers have increased to about 2.15 lakh, as of January 31, 2026, an increase of nearly 50 per cent from 2022.
The number of registered portfolio managers has also gone up from 361 to 501 over the same period.
Pandey said, “India remains among the fastest-growing major economies and is on a trajectory to becoming the world's third-largest economy. This growth will also power a rise in the number of affluent investors, investors who seek professionally managed investment solutions beyond standardised products.”
He said the PMS industry is well placed to serve this demand.
At the same time, he added, durable growth will depend on “discipline” and “trust”. “Sustained growth will come from consistent performance, sound risk management, clear communication, and investor-centric conduct, not from market momentum alone,” he added.
