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Portfolio management scheme limit hiked to Rs 50 lakh, networth requirement to Rs 5 crore

The regulator has also extended the Business Responsibility Report (BRR) requirement to top 1,000 companies, from 500 currently.

The Securities and Exchange Board of India (Sebi) on Wednesday decided to raise the minimum investment amount of clients for portfolio management schemes (PMS) to Rs 50 lakh from the earlier Rs 25 lakh.

Besides, it has decided to increase the networth requirement of portfolio managers to Rs 5 crore from Rs 2 crore, Sebi Chairman Ajay Tyagi told reporters after the board meeting.

The regulator has also extended the Business Responsibility Report (BRR) requirement to top 1,000 companies, from 500 currently.

The regulator has also reduced the time taken to process a rights issue to T+31 days from T+55 days earlier and made Application Supported by Blocked Amount (ASBA) facility mandatory for investors applying to a rights issue.

Sushant Bhansali, chief executive officer, Ambit Asset Management, said: “Sebi’s proposals (on PMS) will immensely help both the asset management industry as well as investors. The ticket size increase should result in additional AUM from first time investors as we expect very few investors to not consider PMS funds due to the limit enhancement. Investment avenues such as mutual funds and advisory platforms continue to be available for the Rs 25-50 lakh bracket investors. The other measures announced will improve transparency and build faith in the investing space.”

“The net worth increase might reduce the turnover from fund management teams to start their own ventures, thereby enhancing stability for investors and investment managers,” he said.

Ashish Shanker, head-investment advisory, Motilal Oswal Private Wealth Management, said, “The Sebi announcement is positive. Moving the investment to Rs 50 lakh will ensure larger net worth clients who have the ability to work with an advisor to evaluate better will come into portfolio management schemes. The increase in networth will ensure serious players remain in the business.”