SEBI Portfolio Managers Regulations 2026 Proposal: PRIM ₹25 Lakh Route, Foreign Securities and New Compliance Framework
SEBI has approved a new 2026 portfolio-manager framework with a ₹25 lakh PRIM route, wider investment flexibility and independent fund-manager architecture. The board decision is important, but firms should wait for the notified regulations before treating every change as operational.
Direct answer
On 24 September 2026, the SEBI Board approved replacing the 2020 portfolio-manager regulations with the proposed SEBI (Portfolio Managers) Regulations, 2026. The package adds product flexibility, a new Portfolio Risk-rated Investment Management route called PRIM, an Independent Fund Manager model and several compliance changes.
The primary source is SEBI’s 24 September 2026 board-meeting release and its official detailed decision paper. Existing firms should continue following the currently applicable Portfolio Managers Regulations, 2020 until the new framework is legally brought into force. A Best CS Firm In India implementation approach separates “board-approved policy” from “effective obligation” in every tracker.
What SEBI approved
| Area | Approved direction | Who should prepare |
|---|---|---|
| Primary markets | IPO and primary debt-market investment permitted | Investment, risk and dealing teams |
| Unlisted debt | DPMS may invest up to 10% of client AUM in investment-grade non-convertible unlisted debt with client consent | Credit, suitability and client-documentation teams |
| Derivatives | Exchange-traded derivative flexibility up to 1.25 times client AUM | Risk, margin and disclosure teams |
| Foreign securities | Specified overseas equity, debt, REIT, fund and government-debt exposure, subject to FEMA/LRS | Operations, FEMA and tax teams |
| PRIM | Risk-rated investment management from ₹25 lakh | Product, distribution and compliance teams |
| IFM model | Independent fund managers may operate within a registered portfolio manager’s framework | Portfolio managers and specialist managers |
PRIM: the proposed ₹25 lakh route
An existing portfolio manager may offer PRIM through a separate investment approach, while a new registration may be limited to PRIM securities. The decision paper describes a ₹2 crore net-worth requirement for the limited registration route and permits a principal officer who is a graduate, CFA or CA with two years’ securities-market experience and a simplified NISM certification.
The approved commercial guardrails include:
- Minimum investment amount of ₹25 lakh per client.
- Maximum fixed management fee of 1% of assets under management; performance fee may also be charged.
- No exit-load provisions for the PRIM route described in the paper.
- A 25% cap on investment in schemes of affiliated, group or associate asset-management companies.
- Segregation between mutual-fund distribution and PRIM clients, except accredited investors.
Foreign securities: opportunity with three control layers
The approved framework permits discretionary and non-discretionary services to invest in specified listed foreign equity and debt, REITs, overseas mutual funds, ETFs, index funds and foreign government debt. Product teams should not treat that as a free-standing permission. Map every product through:
- SEBI layer: eligible instrument, mandate, valuation, custody, concentration and disclosure.
- FEMA/LRS layer: client eligibility, remittance route, limit, prohibited purposes and reporting.
- Tax/operations layer: withholding, foreign tax credit, statement reconciliation, currency risk and estate considerations.
Independent Fund Manager model
The registered portfolio manager remains fully responsible for the service. The IFM is expected to meet the same qualification standard, receive fees through the portfolio manager, use the portfolio manager’s infrastructure for orders and associate with one portfolio manager at a time. The framework also contemplates an exit option for clients if the IFM leaves and an APMI-maintained database.
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Before onboarding an IFM, create a responsibility matrix for suitability, portfolio construction, trade approval, communications, conflicts, recordkeeping, business continuity and client exit.
Compliance easing and operating changes
- A graduate may qualify as principal officer subject to the specified experience and certification conditions.
- Portfolio managers with AUM below ₹100 crore receive a relaxed dealing-room framework.
- A standardized investment-management agreement is proposed.
- Demat and trading authority may be embedded in the agreement, while power of attorney for the bank account continues.
- Reporting timelines are to be harmonized and disclosures may move further into digital form.
90-day implementation plan
| Phase | Action | Output |
|---|---|---|
| Now | Gap-map products, client documents, systems and licences against the board paper | Impact register with assumptions |
| On notification | Confirm exact text, commencement, transition period and circular dependencies | Legal-effective-date matrix |
| Build | Revise IMA, disclosures, fee logic, suitability, risk rating and consent journeys | Approved product pack and controls |
| Launch | Train distribution and operations; test reporting, segregation and complaints | Signed readiness certificate |
Documents to prepare
- Product note and eligibility/risk-rating methodology.
- Revised investment-management agreement and disclosure document.
- Client consent for unlisted debt and relevant conflict situations.
- Foreign-investment, LRS, custody, valuation and tax procedures.
- Derivative exposure, margin and stress-testing policy.
- IFM appointment, supervision, fee and exit documentation.
- Distribution-segregation controls and accredited-investor exception evidence.
Mistakes to avoid
- Marketing PRIM before the final regulations and effective date are confirmed.
- Presenting a risk rating as a guarantee of return or capital protection.
- Ignoring FEMA/LRS because an instrument is permitted under the SEBI proposal.
- Using client consent as a substitute for suitability or conflict management.
- Delegating to an IFM without retaining demonstrable supervision.
- Updating the agreement but not systems, fee calculations and reports.
Founder / Business Takeaway
Wealth-tech founders should build an “approved / notified / operational” tracker. Design can begin from SEBI’s board paper, but onboarding, advertising and portfolio action should follow the final legal text and tested controls.
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FAQ
Is the PRIM ₹25 lakh route operational immediately?
No assumption should be made from the board decision alone. Review the final notified regulations, circulars and effective dates before onboarding or marketing under the new route.
What is the proposed minimum PRIM ticket?
SEBI’s board paper states a minimum investment amount of ₹25 lakh per client.
Can portfolio managers invest in foreign securities?
The approved proposal permits specified foreign instruments for discretionary and non-discretionary services, subject to FEMA, LRS and the final regulatory conditions.
