Market regulator SEBI on Wednesday doubled the minimum ticket size for investing in portfolio management service (PMS) to Rs 50 lakh. Also, it has increased the net worth requirement for PMS operators to Rs 5 crore from the existing Rs 2 crore.
The move is aimed to restrict the entry of dubious operators and curb miss-selling in PMS products.
As per the notification, existing investments can continue until the end date of PMS agreement or as specified by the board. And, existing PMS operators will have 36 months time to meet the enhanced requirement.
For PMS operators, the regulator has put a limit of 25 per cent on investing their asset in unlisted securities.
The PMS sector has been witnessing strong growth, with double-digit CAGR in the last five years. The AUM of discretionary PMS products, excluding PF money have tripled to Rs 1.41 lakh crore at the end of June this year.
As compared to mutual funds, the PMS products are not tightly regulated by SEBI, giving operators the flexibility to practice liberal fund management.