Current Context: On 24 September 2026, the Securities and Exchange Board of India (SEBI) approved a wide-ranging reform package covering Portfolio Management Services (PMS), settlement proceedings, foreign portfolio investors and other securities-market regulations.
Key Points:
- A key decision was the creation of a new Portfolio Managers Route for Investing in Mutual Fund Units (PRIM), which allows portfolio managers to invest client money in direct plans of mutual funds and Specialised Investment Funds (SIFs). SEBI also approved changes to its settlement framework to make regulatory proceedings more efficient.
- Regulator: The reforms were approved by the SEBI Board at its meeting held on 24 September 2026. SEBI regulates India's securities market and intermediaries such as stock exchanges, brokers, mutual funds and portfolio managers.
- New PMS route: SEBI approved the Portfolio Managers Route for Investing in Mutual Fund Units (PRIM). This creates a dedicated route through which portfolio managers can invest client funds in direct mutual-fund schemes and Specialised Investment Funds (SIFs).
- Mutual fund-only PMS category: SEBI also approved a separate PMS category focused on mutual-fund investments. The minimum investment threshold is ₹25 lakh, making it distinct from conventional PMS offerings.
- Wider PMS investment universe: Under the new SEBI (Portfolio Managers) Regulations, 2026, portfolio managers will have greater flexibility to invest in areas such as IPOs, foreign securities, primary debt issuances and mutual funds, subject to the applicable regulatory framework.
- Purpose: The new PMS framework is intended to simplify regulations, remove outdated requirements, improve ease of doing business and expand investment options available to professionally managed portfolios.
- Settlement Proceedings: SEBI approved amendments to the SEBI (Settlement Proceedings) Regulations. Settlement allows a person facing regulatory proceedings to resolve a matter by complying with specified conditions, often including payment of a settlement amount, without going through the complete enforcement process.
- Financial-statement cases: The revised framework also provides a route for settlement in certain matters involving misrepresentation of financial statements or diversion of funds, subject to prescribed safeguards and conditions. This is aimed at making the settlement mechanism more structured and efficient.
- FPI reforms: SEBI expanded access for Foreign Portfolio Investors (FPIs) to physically settled non-agricultural commodity derivatives such as gold, silver, crude oil and natural gas. This is intended to increase participation and liquidity in Indian commodity markets.
- Important distinction: SEBI separately issued a consultation paper on 3 September 2026 proposing net settlement of funds for mutual-fund cash-market transactions. That was a proposal for public consultation, not the same as the reforms formally approved by the SEBI Board on 24 September.
Question
Q1. What is the name of the new route approved by SEBI that allows portfolio managers to invest client funds in direct mutual fund schemes and Specialised Investment Funds?a) MF-PMS Connect
b) Portfolio Investment Settlement Route
c) Portfolio Managers Route for Investing in Mutual Fund Units (PRIM)
d) Unified Mutual Fund Management Route
Answer: c) Portfolio Managers Route for Investing in Mutual Fund Units (PRIM). SEBI approved PRIM on 24 September 2026 as part of its overhaul of the portfolio-management framework, allowing PMS providers to invest eligible client funds in direct mutual-fund schemes and SIFs.
