UPSC Prelims Practice Questions — SEBI mulls revamp of portfolio manager rules

Q1. Portfolio Management Services (PMS) in India are registered and regulated under which one of the following authorities?

  • A. Securities and Exchange Board of India
  • B. Reserve Bank of India
  • C. Insurance Regulatory and Development Authority of India
  • D. Pension Fund Regulatory and Development Authority

Q2. Which one of the following was the first dedicated set of regulations governing portfolio managers in India?

  • A. SEBI (Portfolio Managers) Regulations, 1993
  • B. SEBI (Portfolio Managers) Regulations, 2020
  • C. The SEBI Act, 1992
  • D. SEBI (Alternative Investment Funds) Regulations, 2012

Q3. With reference to SEBI's 2026 proposal to revamp portfolio manager investment norms, consider the following statements: 1. Under the framework preceding the proposal, discretionary portfolio managers were largely confined to listed securities, money-market instruments and mutual fund units. 2. The 2026 proposal permits portfolio managers to invest in 'to-be-listed' securities and in overseas listed equity and debt. 3. The 2026 proposal, for the first time, permits non-discretionary portfolio managers to invest up to 50% of a client's assets under management in unlisted securities. Which of the statements given above is/are correct?

  1. Under the framework preceding the proposal, discretionary portfolio managers were largely confined to listed securities, money-market instruments and mutual fund units.
  2. The 2026 proposal permits portfolio managers to invest in 'to-be-listed' securities and in overseas listed equity and debt.
  3. The 2026 proposal, for the first time, permits non-discretionary portfolio managers to invest up to 50% of a client's assets under management in unlisted securities.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q4. SEBI's 2026 proposal expands the permissible investment universe for portfolio managers. Which one of the following is NOT among the avenues newly opened by the proposal? 1. 'To-be-listed' securities 2. Overseas listed equity 3. Overseas listed debt 4. Direct ownership of physical real estate in the client's name in all cases Which of the above is/are NOT correct?

  1. 'To-be-listed' securities
  2. Overseas listed equity
  3. Overseas listed debt
  4. Direct ownership of physical real estate in the client's name in all cases
  • A. 1 only
  • B. 2 and 3 only
  • C. 4 only
  • D. 1, 2 and 4

Q5. Under the SEBI framework, a 'discretionary portfolio manager' is best described as one who:

  • A. independently exercises discretion over the investment and management of a client's funds or securities under the terms of the contract
  • B. manages a client's portfolio strictly in accordance with the client's instructions for each individual transaction
  • C. only advises the client on investments, the client alone executing all transactions
  • D. pools the funds of several clients into a common corpus and issues units against it

Q6. With reference to the SEBI (Portfolio Managers) Regulations, 2020, consider the following: 1. A discretionary portfolio manager may invest client funds in listed securities, money-market instruments and mutual fund units. 2. A non-discretionary or advisory portfolio manager may invest or advise investment of up to 25% of a client's assets under management in unlisted securities. 3. In portfolio management services, each client's portfolio is managed separately rather than by pooling client funds into a common corpus. 4. A discretionary portfolio manager may, as a rule, invest up to 50% of a client's assets under management in unlisted securities. Which of the above is/are correctly identified?

  1. A discretionary portfolio manager may invest client funds in listed securities, money-market instruments and mutual fund units.
  2. A non-discretionary or advisory portfolio manager may invest or advise investment of up to 25% of a client's assets under management in unlisted securities.
  3. In portfolio management services, each client's portfolio is managed separately rather than by pooling client funds into a common corpus.
  4. A discretionary portfolio manager may, as a rule, invest up to 50% of a client's assets under management in unlisted securities.
  • A. 1, 2 and 3 only
  • B. 2 and 4 only
  • C. 1 and 3 only
  • D. 1, 2, 3 and 4

Q7. Under the SEBI Act, 1992, the general superintendence and direction of the affairs of the Board is exercised primarily by which one of the following?

  • A. The Chairman appointed by the Central Government
  • B. The member nominated by the Reserve Bank of India
  • C. The Finance Secretary to the Government of India
  • D. The senior-most whole-time member elected by the Board

Q8. As per the composition prescribed in the SEBI Act, 1992, the Board of SEBI consists of how many members in total (including the Chairman)?

  • A. Six
  • B. Eight
  • C. Nine
  • D. Eleven

Q9. The current minimum investment of ₹50 lakh required from a client to avail portfolio management services was prescribed under which one of the following?

  • A. SEBI (Portfolio Managers) Regulations, 2020
  • B. SEBI (Portfolio Managers) Regulations, 1993
  • C. The SEBI Act, 1992
  • D. SEBI (Alternative Investment Funds) Regulations, 2012

Q10. Consider the following pairs of investment vehicle and its regulatory minimum investment: 1. Portfolio Management Services — ₹50 lakh 2. Alternative Investment Funds — ₹1 crore 3. Specialised Investment Fund — ₹10 lakh 4. Mutual fund (regular open-ended scheme) — ₹50,000 Which of the above pairs is/are correctly matched?

  1. Portfolio Management Services — ₹50 lakh
  2. Alternative Investment Funds — ₹1 crore
  3. Specialised Investment Fund — ₹10 lakh
  4. Mutual fund (regular open-ended scheme) — ₹50,000
  • A. 1, 2 and 3 only
  • B. 2 and 4 only
  • C. 1 and 3 only
  • D. 1, 2, 3 and 4

Q11. Consider the following statements comparing Portfolio Management Services (PMS), mutual funds and Alternative Investment Funds (AIFs) in India: 1. In PMS, securities are held in the individual investor's own name/demat account, unlike a mutual fund where the investor holds units of a pooled corpus. 2. The regulatory minimum investment for AIFs is higher than that for PMS. 3. Mutual funds in India are governed by the SEBI (Mutual Funds) Regulations, 1996. Which of the statements given above is/are correct?

  1. In PMS, securities are held in the individual investor's own name/demat account, unlike a mutual fund where the investor holds units of a pooled corpus.
  2. The regulatory minimum investment for AIFs is higher than that for PMS.
  3. Mutual funds in India are governed by the SEBI (Mutual Funds) Regulations, 1996.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q12. Reflecting a calibrated liberalisation that widens avenues while retaining a prudential ceiling, SEBI's 2026 proposal permits a discretionary portfolio manager to invest up to what percentage of a client's assets under management in investment-grade unlisted debt?

  • A. 5 per cent
  • B. 10 per cent
  • C. 15 per cent
  • D. 25 per cent