How to Start Portfolio Management Services in India?

Portfolio Management Services (PMS) in India are dedicated to investors, especially those who belong to the high-net-worth individual category. Experts in the security markets or financially sound individuals provide a tailored investment roadmap for optimised returns.

Backed by a dedicated research team, these professionals help investors with informed decisions while investing. A PMS in India offers multiple investment options across various securities, like debts, stocks, fixed income, and more.

With a growing number of investors, you might be looking into how to start portfolio management services in India. Read this blog and understand what it means, eligibility and more.

What are Portfolio Management Services?

A PMS in India offers a tailored investment strategy that aligns with the financial objectives of an investor. They primarily assess their financial capabilities, risk-taking abilities, time horizon and other factors under consideration and prepare an investment roadmap for you.

To assist investors with investment plans, a PMS offers services in different formats. They include discretionary PMS, non-discretionary PMS, and active and passive PMS.

Regardless of the PMS you choose, it aims to mitigate investment risks and adjust to market volatility and other related factors. They can help investors build a diversified portfolio and achieve the desired return on investment.

What is the Regulatory Framework for PMS in India?

If you are interested in starting a PMS setup or just curious about how to start PMS services in India, here are some guidelines you must note:

• Registration and Fees

  You must register with the Securities and Exchange Board of India (SEBI) to facilitate PMS facilities for the investors. Pay a one–time registration fee of INR 1 lakh or PMS charges, which can be paid via a Demand Draft. Also, submit an application Form A, and for additional documentation, you can refer to the SEBI’s official website.

• Net Worth and Renewal Charges

  If you are curious about how to start PMS in India, you must know that such a service provider or portfolio manager must have a net worth of INR 5 crore. You also need to pay a fee of INR 10 lakh to get your PMS registration certificate. The validity of this certificate is for three years, and its renewal fee is INR 5 lakh.

• Promotion of Fair Practices

  Apart from fees and application requirements, you must also abide by the fair practice guidelines of the SEBI. This includes prohibiting churning activities, insider trading, etc. You must establish transparency to safeguard investors from malpractice in investments.

What are the Eligibility Criteria and Qualifications for PMS in India?

Take a look at the following eligibility criteria and qualifications, you must have to start as a PMS provider:

• A PMS provider must be an LLP or a company, as individuals cannot apply to become a PMS provider.
• Such an agency also needs to assign a principal officer to lead investment activities and must have cleared the NISM XXI-A and XXI-B examinations.
• To provide PMS facilities, the agency must appoint at least one compliance officer and at least one employee with 2 years of investment management experience.
• The applicant must not have any previous regulatory violation records to get the registration.

Things to Keep in Mind Before Starting PMS in India

Now that you know the essentials of starting a PMS in India, take note of the following pointers:

• You must have a clear understanding of provisions, circulars, regulations, etc., and abide by them.
• Before registration, ensure the minimum net worth amount and additional charges for seamless approval.
• Also, remember to update or renew the registration certificate every three years and apply for renewal three months before its expiry.

Conclusion

If you want to know how to start portfolio management services in India, you can register for it as an LLP or a company. Also, you must meet certain eligibility criteria and follow the guidelines of the SEBI to start a PMS service.

FAQ’s

1. What are some of the regulatory requirements to start a PMS in India?

The SEBI guidelines allow LLPs and companies to apply for it. Also, a PMS provider must maintain transparency, promote fair practices, keep registration certificates updated, etc.

2. What is the minimum capital requirement to set up a PMS in India?

You must pay a one-time application charge of INR 1 lakh. Also, having a net worth of INR 5 crore is mandatory, along with an INR 10 lakh registration certificate and INR 5 lakh renewal fees.

3. What is the process to register as a PMS with SEBI in India?

You must apply for this process with INR 1 lakh to the SEBI with proper documentation. Upon approval, pay INR 10 lakh to retrieve the certificate and pay INR 5 lakh for renewal.

4. What are the key documents required for SEBI registration for PMS?

Basic documents include COI, AOA, MOA, etc., of the applicant. Also, produce the NISM XXI-A and NISM XXI B of the principal officer. You can refer to the official SEBI website to locate the additional documents to produce.