A ₹25 lakh portfolio manager that only buys mutual funds
SEBI's new Portfolio Managers Regulations, 2026 add a route called PRIM, with half the usual minimum. It starts on 1 April 2027. Here is what it can hold and what is still undecided.
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SEBI published the Portfolio Managers Regulations, 2026 on 12 October 2026. They replace the 2020 rules that govern every portfolio management service (PMS) in India, and they come into force on 1 April 2027. On that date the 2020 regulations stand repealed.
Most of the text carries over the old rules. One chapter is new. Chapter VI creates the Portfolio Management Service Route for Investment in Mutual Fund units, which SEBI shortens to PRIM.
What PRIM is
A PRIM manager runs your money the way a PMS does, but it can only buy one kind of thing. Regulation 32 limits it to direct plans of mutual funds in India, including index funds, exchange traded funds and specialised investment funds (SIFs). It cannot buy individual shares, bonds or unlisted securities.
The minimum is lower. Regulation 33 sets it at ₹25 lakh per client. An ordinary PMS still needs ₹50 lakh, the same floor as under the 2020 regulations. Accredited investors remain exempt from the ₹50 lakh minimum.
| Ordinary PMS | PRIM | |
|---|---|---|
| What it can buy | Listed shares, IPOs, primary debt issues, money market instruments, mutual fund units, and foreign securities SEBI allows | Direct plans of mutual funds only, including index funds, ETFs and SIFs |
| Minimum per client | ₹50 lakh | ₹25 lakh |
| Manager's minimum net worth | ₹5 crore | ₹2 crore, for a manager that offers only PRIM |
| From | 1 April 2027 | 1 April 2027 |
Existing portfolio managers can add PRIM as a separate investment approach. New firms can register to offer PRIM alone with the smaller ₹2 crore net worth and a principal officer with two years of securities market experience.
Why direct plans matter
A direct plan has no distributor commission built in, so its expense ratio is lower than the regular plan of the same fund. AMFI publishes both figures for every scheme every day on its TER page. Under PRIM, the manager's fee sits on top of those direct-plan costs. Whether the total ends up higher or lower than holding the same funds yourself depends on the fee, and that number does not exist yet.
What is still undecided
Regulation 34 lets SEBI specify further conditions, including fees, how clients are kept separate, record keeping and limits on investing in the manager's own associates. None of these have been issued. Until they are, nobody can compare the full cost of a PRIM account with a regular PMS or with a direct mutual fund portfolio.
The rest of the new text applies to PRIM with listed exceptions. One change affects ordinary PMS too. Regulation 17(1)(b) names initial public offers of equity and primary market issues of debt among what a portfolio manager may invest in, wording the 2020 regulations do not contain.
Who this affects
Say a household has ₹30 lakh it wants someone else to manage. Today that is below the ₹50 lakh PMS floor, so the choices are mutual funds held directly, a distributor, or a SEBI-registered investment adviser. From April 2027 a PRIM manager could also take it on, inside the narrower mutual-fund-only limits above.
Nothing changes for anyone before 1 April 2027. Existing PMS accounts continue under the 2020 rules until then.
Questions
- What is PRIM?
- A route under SEBI's Portfolio Managers Regulations, 2026 in which a portfolio manager invests only in direct plans of mutual funds, including index funds, ETFs and SIFs.
- What is the minimum investment for PRIM?
- ₹25 lakh per client, under regulation 33. An ordinary PMS still requires ₹50 lakh.
- When do the new rules start?
- 1 April 2027. The 2020 Portfolio Managers Regulations are repealed on that date.
- How much can a PRIM manager charge?
- SEBI has not said yet. Regulation 34 allows it to specify fees and other conditions later.
- Can a PRIM manager buy shares or bonds?
- No. Regulation 32 limits PRIM to direct plans of mutual funds in India.
Sources
- SEBI, Portfolio Managers Regulations, 2026 (12 October 2026)
- SEBI, Portfolio Managers Regulations, 2020 (as amended to 3 September 2025)
- AMFI, TER of mutual fund schemes
Compound is analysis, not investment advice. Reva Money is not a SEBI-registered investment adviser.
