What is PMS? Portfolio Management Services in India Explained

A portfolio management service (PMS) in India is an arrangement in which a SEBI-registered portfolio manager runs a portfolio of shares, bonds and other securities for you, held in your own name, under a written agreement. It is governed by the SEBI (Portfolio Managers) Regulations, 2020, needs at least ₹50 lakh, and differs from a mutual fund in one basic way: you own the securities themselves, not units of a pooled fund.

What is PMS? The meaning under SEBI's rules

Under the 2020 regulations, a portfolio manager is a body corporate, such as a company or an LLP, that, under a contract with a client, manages or administers that client's portfolio of securities or funds, and it must be registered with SEBI. SEBI's public list of registered portfolio managers showed 538 entries on 12 October 2026, each with a registration number beginning "INP".

Two rules shape the product. A discretionary portfolio manager must manage each client's money individually, in a way that does not take on the character of a mutual fund. And SEBI's Master Circular for Portfolio Managers of 16 July 2025 bars managers from marketing their portfolios as "schemes". Instead, you choose an investment approach: a documented philosophy that states its objective, securities, benchmark, indicative horizon and risks.

SEBI notified the SEBI (Portfolio Managers) Regulations, 2026 on 7 October 2026, and they replace the 2020 rules from 1 April 2027. They keep the ₹50 lakh minimum, the custodian rule and reports at least every three months, and let managers buy shares in IPOs. Sanriya's PMS page summarises the product.

What is the minimum investment for a PMS in India

Regulation 23(2) says a portfolio manager may not accept funds or securities worth less than ₹50 lakh from a client. The master circular adds that the first lump sum, in cash or securities, must itself be at least ₹50 lakh, so you cannot start smaller and build up. SEBI doubled the figure from ₹25 lakh when it rewrote the rules in 2020.

SEBI's investor education site says the minimum targets high net worth investors. The logic is simple:

• A PMS portfolio is often concentrated, so one holding can move your result far more than in a broadly diversified fund.
• Fees are usually higher than in mutual funds, and you see every price swing in your own account.
• A separately managed account only works if there is enough money to buy each holding in its intended proportion.

Two exceptions matter for most investors, one today and one from 1 April 2027. Accredited investors, who meet SEBI's eligibility criteria and hold a certificate of accreditation, can invest below ₹50 lakh if the disclosure document and agreement allow it. And the 2026 regulations add a mutual-fund-only PMS route, which they call PRIM (Portfolio Management Service Route for Investment in Mutual Fund units), with a ₹25 lakh minimum; under it the manager may buy only direct plans of mutual funds, index funds, ETFs and Specialized Investment Funds.

How a PMS works: the accounts in your name

For the step-by-step process, see how to open a PMS account.

Your own demat account and the custodian

The securities sit in a demat account opened in your name. The regulations forbid the manager from holding clients' securities in its own name, and allow off-market transfers out of your account only in limited cases, such as settling your trades or with your consent for each transfer. Every portfolio manager, except one offering only the suggestion-only service described below, must appoint an independent custodian to hold the securities, and your demat account is mapped to it.

The agreement and power of attorney

Before money moves, you sign an agreement that sets the investment objective, the investment approach, any companies or industries you want excluded, fees, custody, reporting and how you can withdraw. You also sign a power of attorney so the manager can operate your account and place trades. Read its scope: it should cover trading within the mandate, not moving your cash or securities elsewhere. Under the new framework, SEBI's board said on 24 September 2026, a standard agreement will carry this authority for demat and trading accounts, with a power of attorney only for the bank account, as RBI requires.

The bank account

Cash is held at a scheduled commercial bank. Depending on the manager, it sits either in a bank account in your name operated under the power of attorney, or in a pooled client account kept by the manager. In the pooled model SEBI requires client-wise records, daily reconciliation, no use of one client's money for another, and a statement to you at least monthly.

Discretionary, non-discretionary and suggestion-only PMS

SEBI recognises three types:

• Discretionary PMS: the manager decides what to buy and sell, and when, within the agreed approach, and executes the trades.
• Non-discretionary PMS: the manager proposes trades and handles execution and record-keeping, but every decision is yours; nothing is bought or sold without your approval.
• Suggestion-only service: the manager only suggests what to buy or sell. You place and settle the trades yourself, and the manager takes no responsibility for execution, custody or accounting.

The type also changes what can be held. Under the 2020 rules a discretionary manager may invest only in listed or exchange-traded securities, money market instruments, mutual fund units and other securities SEBI specifies, while non-discretionary and suggestion-only arrangements may also put up to 25% of the client's assets in unlisted securities. Your account opening form must state which type you are opening and, for a discretionary account, what powers the manager can exercise.

How is your money invested in a PMS

You can fund a PMS with cash, with shares, bonds or fund units you already own, or both. If you transfer securities, the manager may sell those that do not fit the approach, and each sale is taxable in your hands.

From there:

• The manager buys for each client separately, or combines orders and allocates them pro rata at the day's weighted average price.
• Cash waiting to be invested may be parked in liquid mutual funds, and only through direct plans.
• Some managers stagger entry with a systematic transfer from a liquid holding into equity.
• The manager may not borrow money or securities on your behalf, or leverage your portfolio for derivatives.

Because clients join on different dates, your portfolio and returns can differ from another client's in the same approach.

How a PMS is reported to you

Regulation 31 requires a report at least once every three months, and whenever you ask. In practice most managers send a monthly statement and offer online access. It must show your holdings and their values, cash, every trade, dividends and interest, expenses, the risks the manager foresees, any default on debt holdings, or a downgrade of one to default rating, and the commission paid to a distributor for your account.

Performance reporting follows SEBI's circular of 16 December 2022. Each investment approach is tagged to one of four strategies (equity, debt, hybrid or multi asset), and the manager picks its benchmark from up to three that APMI prescribes for that strategy. Your report shows your own annualised return, allowing for the dates you added or took out money (XIRR); the lowest, highest and median XIRR across all clients in that approach; the approach's time-weighted return, which removes the effect of client cash flows; and the benchmark's return, all net of fees and expenses.

An independent chartered accountant audits the portfolio accounts every year and you receive the certificate; you may also appoint your own. Managers file monthly reports with APMI, which publishes comparable data on its website, so you can check a manager's figures there and its registration on SEBI's list.

What is the PMS disclosure document

The disclosure document is the manager's formal description of itself and its service. You must receive it, with a certificate in Form C, before you sign the agreement. It must cover:

• fees for each activity, and the range of fees under each head;
• risks, including those specific to each investment approach;
• related-party transactions, conflicts of interest and investments in associates;
• the manager's diversification policy;
• performance for the preceding three years, calculated on a time-weighted basis for discretionary portfolios;
• audited financial statements for the preceding three years;
• the option to sign up directly with the manager, without a distributor.

An independent chartered accountant certifies it, it is filed with SEBI and kept on the manager's website, and a material change must be filed within 7 working days. From 1 April 2027 it becomes digital, is refreshed within six months of each financial year end, and material changes go out as an addendum within 15 calendar days.

Read the fee section closely. Managers charge a fixed fee, a performance fee (usually above a hurdle rate and subject to a high-water mark) or both. No upfront fee is allowed and 18% GST applies. Operating expenses other than brokerage are capped at 0.50% a year of your average daily assets, and exit loads at 3% in the first year, 2% in the second and 1% in the third, with none after that. PMS fees and charges explained works through the numbers.

Who typically uses a PMS, and when it may not fit

A PMS tends to suit investors who:

• have investable wealth well above ₹50 lakh, so the PMS is one part of a wider portfolio;
• want to see and own each holding, and perhaps exclude particular companies or sectors;
• can stay invested three years or more and accept larger swings than in a diversified fund.

Individuals, companies and other entities, and non-residents can all open an account; SEBI counted 2.19 lakh PMS clients on 31 May 2026.

It is likely a poor fit if:

• ₹50 lakh is most of what you have, which ties your wealth to one manager's choices;
• you may need the money within three years, when exit loads can apply;
• you prefer to pay tax only when you exit, as with mutual funds and SIFs;
• low cost and simplicity matter more to you than a portfolio in your own name.

The main risks are the ones SEBI's investor site lists: market, concentration, liquidity and manager risk. A PMS can lose money, and an approach's past returns say nothing certain about its future.

PMS vs mutual fund vs SIF at a glance

Every sale the manager makes is your own transfer. For FY 2026-27, under the Income-tax Act, 2025, gains on listed shares held 12 months or less are taxed at 20%, and longer-held gains at 12.5% above ₹1.25 lakh a year, plus surcharge and 4% cess. In a mutual fund or SIF, trades inside the fund create no tax for you until you redeem. How PMS gains are taxed covers the detail.

How Sanriya helps with a PMS

Sanriya Finvest Pvt. Ltd., Pune, is an APMI-registered PMS distributor (APRN01056) and an AMFI-registered mutual fund distributor (ARN-193359). We explain how a PMS works and what each document says, handle the paperwork and service the account afterwards. The choice of manager and approach stays with you: as a distributor, we do not make investment decisions for clients. We do not charge you a separate fee; the portfolio manager pays us a trail commission out of its own fee, which must be disclosed to you, and you can always sign up with a manager directly. Contact us to go through a manager's disclosure document and the account-opening paperwork with you.