SEBI to revamp PMS rules and study new RBI funding norms: Tuhin Kanta Pandey

SEBI to revamp PMS rules and study new RBI funding norms: Tuhin Kanta Pandey

He said the draft regulations would be released for public consultation before the regulator’s June board meeting

The Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey has stated that the regulator is drawing up a comprehensive overhaul plan of its portfolio management services (PMS) regulations.

While addressing the audience at the Portfolio Management Services (PMS) Conclave, he added that the regulator would also look into brokers’ representations seeking its intervention on the Reserve Bank of India’s (RBI’s) new capital market funding norms.

Elaborating on the PMS norms, the Charman said, "We propose to carry out a comprehensive review so that the framework remains effective, adaptable, and aligned with evolving market dynamics."

He furthered that the draft regulations will be released for public consultation before SEBI’s June board meeting.

As per SEBI’s data, the PMS industry, with 2.15 lakh clients, managed Rs.10.5 lakh crore in assets, excluding Employees' Provident Fund Organisation (EPFO) and Provident Fund (PF) as of 31 January 2026, growing at a 17 percent Compound Annual Growth Rate (CAGR).

However, Pandey added, "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 emphasized that investor suitability must remain central to the business model. The chief stated, "Risk profiling, suitability assessment, and client communication must be clear, consistent, and evidence-based. Going ahead, PMS distributors conduct matters that the industry must guard against mis-selling.”

On another front, Pandey maintained that SEBI would examine representations from stock brokers on the RBI’s new capital market funding norms.

The RBI proposed raising bank-guarantee collateral requirements for proprietary from 50 percent.

Pandey stated, "We have received a representation. We will see what we can and need to do on it because the RBI had initially opened draft guidelines and sought opinions. It is in relation to 3-4 issues around bank guarantees and how much collateral has to be given for proprietary trading.”

Meanwhile, after the RBI's board meeting in New Delhi, RBI Governor Sanjay Malhotra said the central bank was not considering a review of the recently announced rules on bank financing of stock-market intermediaries.

While stating that the framework was finalized after due consultation, Pandey maintained, "There is no change that we are contemplating."

Addressing the matter on grey-market trading, the Chairman explained that SEBI was working on a mechanism to introduce oversight on a move aimed at grey-market activity linked to 'to-be-listed' stocks’ upcoming IPOS.

Adding that the regulator would work out the operational details and issue a consultation paper in due course, he stressed, "We have deliberated the issue internally, and there is a possibility of such through the exchange mechanism for to-be-listed stocks, though not the entire unlisted space, but the to-be-listed space where SEBI's jurisdiction comes from the statute.”

The SEBI chief also addressed the recent suspension of a general manager in connection with a ‘sensitive vigilance matter’.

He said, "The evidence was egregious enough for us to act. It is important that if there is any such case, we will get to the bottom of it. We are contemplating disciplinary proceedings.”