SEBI Grade A Current Affairs — 26 October 2026

Portfolio Management Services (PMS) are SEBI-regulated investment services where a registered portfolio manager manages securities on behalf of clients. SEBI mandates a minimum investment of ₹50 lakh per client. Portfolio managers must register with SEBI under the SEBI (Portfolio Managers) Regulations, 2020, holding a certificate of registration. The regulator maintains a public list of all registered portfolio managers, ensuring transparency and investor protection in this space reserved for high-net-worth individuals seeking customised, discretionary or non-discretionary investment management.

Portfolio Management Services (PMS) sit between mutual funds and direct market participation. Unlike mutual funds — which pool retail money into a common corpus — PMS offers individualised portfolios directly held in the client's own demat account. This distinction is crucial: the investor retains beneficial ownership of each security.

SEBI regulates PMS under the SEBI (Portfolio Managers) Regulations, 2020, which replaced the earlier 1993 regulations. Key structural features include:

**Registration:** Any entity offering PMS must obtain a certificate of registration from SEBI. Registration number format: INP followed by digits (e.g., INP000007687).

**Minimum Investment:** SEBI raised the minimum investment threshold from ₹25 lakh to ₹50 lakh in 2020, restricting PMS to high-net-worth clients and ensuring only sophisticated investors access these products.

**Types of PMS:**
- Discretionary: Portfolio manager takes investment decisions independently.
- Non-Discretionary: Manager executes only client-directed decisions.
- Advisory: Manager only advises; client executes trades.

**Net Worth Requirement:** Portfolio managers must maintain a minimum net worth of ₹5 crore.

**Disclosure:** Managers must provide clients a Disclosure Document detailing fees, risks, and performance, updated annually.

**Fee Structure:** Performance-based fees are permitted; profit-sharing above a pre-agreed hurdle rate is allowed under the 2020 regulations.

SEBI publishes the full list of registered portfolio managers on its website, serving as an investor-protection tool — investors can verify registration before committing funds.

After the RBI's October 2024 monetary policy review, government bond yields have risen sharply, threatening to increase the central government's interest payment burden for the rest of the fiscal year. When yields rise on newly issued or rolled-over debt, the cost of borrowing goes up, squeezing the fiscal deficit target. Higher interest payments crowd out capital expenditure, tightening the government's room to spend on infrastructure and social programmes without breaching the deficit ceiling.

Government bond yields and fiscal arithmetic are tightly linked through a mechanism most aspirants underestimate. When the RBI holds or raises policy rates — or signals a hawkish stance — bond market participants demand higher yields on government securities (G-Secs) to compensate for the expectation that money will remain expensive. The yield on the benchmark 10-year G-Sec is the reference rate for sovereign borrowing cost.

India's central government borrows heavily through dated securities and Treasury Bills throughout the year under a market borrowing programme announced in the Union Budget. When yields rise mid-year — after that programme is already underway — the government must either pay higher coupon rates on fresh issuances or accept higher cut-off yields at weekly auctions. Both outcomes increase the interest outgo beyond what was budgeted.

Interest payments are the single largest item in India's revenue expenditure, consuming over 40 paise of every rupee the government earns in revenue receipts. A sustained yield spike therefore compresses the fiscal space available for discretionary spending. The government faces a trilemma: cut capital expenditure (crowding-out), accept a wider fiscal deficit (breaching the FRBM glide path), or reduce market borrowing (tightening liquidity further).

This connects to the LAF corridor: if the RBI wants to bring yields down it can conduct Open Market Operations (OMO) — purchasing G-Secs from the secondary market — injecting liquidity and pushing prices up (yields down). The absence of such OMOs signals the RBI's tolerance for tighter financial conditions, which is itself a transmission tool for inflation control.