On July 7, 2025, SEBI released a consultation paper proposing a significant overhaul to its regulatory framework, allowing mutual fund AMCs to manage non-broad-based pooled funds—such as family-office or offshore investor pools—without needing a separate PMS license. The move comes as part of broader efforts to modernise fund management and reduce regulatory overlap.Under existing rules, AMCs can only manage broad-based funds—those with 20 or more investors and no single investor holding more than 25% of the assets—unless they apply for a PMS license, which allows performance-linked fees and less regulated structures. Critics have long argued this creates an uneven playing field: while PMS providers can tap lucrative high-net-worth mandates, AMCs are barred from doing so despite having identical investment teams and research resources.
SEBI’s proposal would allow AMCs to manage these non-broad-based funds through a separate internal unit, complete with its own personnel, systems, and governance oversight. The application, however, comes with a matrix of safeguards aimed at eliminating conflicts of interest: caps on fee differentials, a ban on performance-linked fees, proportionate allocation of human and technological resources, and strict internal walls to prevent front-running, insider trading, or favouring private mandates over retail funds.
The market has reacted swiftly to this proposal. On the day of the announcement, shares of top AMCs—including HDFC AMC, Aditya Birla Sun Life, and Nippon Life—surged by 3–4% driven by optimism that this change could unlock new revenue streams. With public feedback now open until July 28, SEBI is expected to finalise the new framework by late FY2026.For AMCs, this change could be transformative: offering them the flexibility to attract family offices, overseas investors, and institutional mandates without straying into full-blown PMS territory. For retail investors, however, success hinges on SEBI’s ability to enforce the proposed firewalls and fee transparency mechanisms, ensuring that managing a dual mandate doesn’t compromise fund performance or inflate costs unfairly.
SEBI’s proposal would allow AMCs to manage these non-broad-based funds through a separate internal unit, complete with its own personnel, systems, and governance oversight. The application, however, comes with a matrix of safeguards aimed at eliminating conflicts of interest: caps on fee differentials, a ban on performance-linked fees, proportionate allocation of human and technological resources, and strict internal walls to prevent front-running, insider trading, or favouring private mandates over retail funds.
The market has reacted swiftly to this proposal. On the day of the announcement, shares of top AMCs—including HDFC AMC, Aditya Birla Sun Life, and Nippon Life—surged by 3–4% driven by optimism that this change could unlock new revenue streams. With public feedback now open until July 28, SEBI is expected to finalise the new framework by late FY2026.For AMCs, this change could be transformative: offering them the flexibility to attract family offices, overseas investors, and institutional mandates without straying into full-blown PMS territory. For retail investors, however, success hinges on SEBI’s ability to enforce the proposed firewalls and fee transparency mechanisms, ensuring that managing a dual mandate doesn’t compromise fund performance or inflate costs unfairly.
Ultimately, this proposal is a move towards the market regulator’s ongoing efforts to harmonise India’s asset management ecosystem. By allowing AMCs to diversify within the mutual fund architecture—rather than outsourcing to separate PMS entities—SEBI aims to enhance Indian fund houses’ global competitiveness, while retaining investor safeguards.
