India’s securities regulator has initiated a sweeping review of rules governing portfolio management services (PMS), signaling a major policy reset for one of the country’s fastest-growing segments in wealth management. Speaking at a PMS industry conclave, SEBI Chairman Tuhin Kanta Pandey said the regulator is targeting June 2026 to place proposed amendments before its board after consultations with market participants.

The move comes as the PMS industry undergoes structural expansion driven by rising financialization of household savings, higher participation from affluent investors, and growing demand for customized investment solutions beyond traditional mutual funds. According to data cited at the event, assets under management in PMS schemes have climbed sharply from about ₹5 trillion in FY21 to ₹10.5 trillion as of January 31, 2026 implying a compounded annual growth rate of roughly 17%.

Client participation has expanded alongside asset growth. The number of PMS clients has reached approximately 2.15 lakh, representing nearly 50% growth since 2022. Industry capacity has also broadened, with registered portfolio managers rising from 361 to 501 over the same period. Distribution networks are expanding too, with more than 7,000 additional individual registrations recorded in FY26 alone.

This rapid scale-up has exposed regulatory and operational frictions that SEBI now appears determined to address. Pandey indicated that the objective of the review is to ensure that the framework governing portfolio managers remains “effective, adaptable and aligned with evolving market dynamics,” especially as new product formats such as Specialized Investment Funds (SIFs) emerge.

Several reforms have already been implemented in recent years to balance ease of doing business with investor protection. These include simplified digital onboarding, standardized disclosures, relaxed re-KYC norms for non-resident Indians, and a mechanism enabling time-bound transfer of PMS accounts between managers. However, industry participants have continued to flag structural inefficiencies particularly those related to account portability and taxation.

One key concern under examination is the requirement for investors to open a new demat account when switching portfolio managers. This rule often triggers operational delays and tax implications, discouraging mobility and competition within the industry. SEBI’s review could therefore focus on creating a smoother transition framework, potentially similar to portability features seen in mutual funds or insurance.

The regulatory rethink also reflects broader changes in India’s investment landscape. PMS products cater primarily to high-net-worth individuals and family offices seeking active, concentrated strategies that differ from diversified mutual fund portfolios. As wealth creation accelerates in India’s upper-income segments, this market is expected to play a larger role in capital formation and equity market depth.

For financial markets, a modernized PMS framework could have multiple ripple effects. Greater regulatory clarity may encourage more professional money managers to enter the space, deepen institutional participation in equities, and channel long-term domestic capital into listed companies. It could also intensify competition with mutual funds and alternative investment funds, reshaping the hierarchy of investment vehicles available to affluent investors.

However, stricter compliance requirements-if introduced could raise operating costs for smaller portfolio managers, potentially leading to industry consolidation. Enhanced disclosure norms or performance reporting standards may also expose weaker strategies, benefiting investors but challenging underperforming firms.