Portfolio managers may soon invest in foreign stocks, bonds, REITs: What PMS clients should know

What's the proposal?

At present, portfolio managers are not allowed to invest client funds in foreign securities. However, resident Indians are allowed to invest in foreign securities under the RBI's Liberalised Remittance Scheme (LRS), subject to an overall limit of USD $250,000 per financial year.

The regulator has now proposed to allow portfolio managers to invest in the following overseas securities:

• Listed equity shares

• Listed debt securities

• Overseas funds: Units/securities issued by overseas mutual funds or unit trusts registered with overseas regulators and investing in listed equity shares, listed debt securities, and listed real estate investment trusts (REITs).

"This would enable investors to get access to foreign securities through a regulated investment professional landscape catering to sophisticated investors, HNIs, etc. The investment in foreign securities will be governed under FEMA, 1999," SEBI said in the consultation paper dated July 24, 2026.

The regulator expects that the proposal would help establish regulatory parity between portfolio managers and other asset managers, such as mutual funds, alternative investment funds (AIFs), and IFSC-based portfolio managers allowed to make overseas investments.

The consultation paper, however, proposes following conditions on the portfolio managers for investing client funds in foreign securities:

• Portfolio managers will have to ensure that investment in foreign securities do not breach the applicable limits under FEMA, 1999 and complies with the reporting requirements as per applicable law.

• The portfolio manager will be required to obtain explicit positive consent of the client in the format specified for investing in foreign securities at the time of onboarding of the client.

• For existing clients, portfolio managers may execute an addendum with positive consent of the client.

SEBI seeks feedback

The regulator has sought comments from the industry stakeholders on the following queries related to investments in foreign securities:

1)Do you agree with the proposal of permitting a portfolio manager to invest in foreign securities?

2)If yes, do you agree with the list of permitted instruments...?

Industry stakeholders can submit their feedback on the above queries by August 13, 2026.