Non-Discretionary PMS in India: Meaning, Rules & How It Works

A non-discretionary PMS is a SEBI-regulated arrangement in which a professional portfolio manager researches opportunities and recommends specific trades for your portfolio, but cannot execute a single one of them without your explicit, transaction-by-transaction approval. The manager brings the analysis, the market access, and the trade idea; you bring the final decision.

This sits deliberately in the middle of a three-way spectrum recognized under Indian portfolio management regulation:

• In discretionary PMS, the manager decides and executes, with no requirement to consult you before a trade goes through.
• In non-discretionary PMS, the manager decides what to recommend, but you must approve each transaction before the manager executes it on your behalf.
• In pure advisory PMS, the manager only advises — you make the decision and place the trade yourself.

This structure is often described as "we guide, you decide" — a portfolio manager's research and conviction, filtered through your own final sign-off, with the manager still handling execution once you say yes.

NDPMS isn't a new product wrapped in a trendy acronym — it's a structural category that has existed since portfolio management was first formally regulated in India.

Licensed, SEBI-supervised portfolio management in India traces back to the Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993, which took effect on January 7, 1993 (SEBI). This was the origin point for portfolio management as a distinct, regulator-supervised financial service in India — the framework within which discretionary, non-discretionary, and advisory mandates would eventually be distinguished.

Nearly three decades later, the industry looked very different. By 2019, SEBI was reviewing an industry that had grown substantially since the early 2010s, alongside the rise of algorithm-assisted portfolio construction and a string of investor-protection concerns — inconsistent performance reporting, portfolios that quietly diverged from what was marketed, and a lack of standardized disclosure. SEBI's response was a comprehensive rewrite: the SEBI (Portfolio Managers) Regulations, 2020, which came into effect on January 16, 2020 

That overhaul reset the ground rules for every PMS in India — discretionary and non-discretionary alike — and it's still the framework governing NDPMS today.

Strip away the jargon, and a non-discretionary PMS relationship follows a fairly consistent rhythm:

• Onboarding and profiling. You complete KYC, sign the account-opening documents, and receive the portfolio manager's PMS Disclosure Document — a mandatory SEBI filing that spells out fees, strategy, risks, and past performance.
• A dedicated account, in your name. Unlike a mutual fund, your holdings sit in your own demat account under a Power of Attorney limited to executing approved trades — you own the underlying securities directly, not units in a pooled vehicle.
• Research and recommendation. The portfolio manager's research desk identifies an opportunity — a stock to buy, trim, or exit — and sends you a specific, actionable recommendation.
• Your approval, every time. Nothing executes until you say yes. You can accept, reject, or sometimes modify the recommendation.
• Execution and reporting. Once approved, the manager executes the trade through your account and reports back, with performance measured using the Time-Weighted Rate of Return (TWRR) method mandated under SEBI's 2020 rules.

That last step matters more than it sounds: because every trade needs a "yes," the reporting trail in a non-discretionary account also functions as a running record of exactly which of the manager's calls you accepted and which you didn't.

Most explainers stop at "who clicks the button." That's the headline difference, but it's not the only one that matters.

Here's a distinction that rarely gets the attention it deserves: non-discretionary PMS can allocate up to 25% of your assets under management (AUM) to unlisted securities — including units of Alternative Investment Funds (AIFs), REITs, InvITs, and unlisted debt instruments. Discretionary PMS cannot — it's restricted to listed securities, mutual fund units, and money market instruments only.

In practice, that means non-discretionary (and advisory) PMS structurally offers access to a broader investable universe than discretionary PMS does — a meaningful difference for investors interested in pre-IPO opportunities, private credit, or other unlisted exposure, and arguably a sharper legal differentiator than the "who decides" framing most content leads with.

Because it's regulated under the same framework as discretionary PMS, the same core compliance rules apply.

SEBI mandates a minimum investment of ₹50 lakh per client, across all PMS strategies — a threshold that was raised from the earlier ₹25 lakh floor as part of the 2020 overhaul. Individual portfolio managers are free to set their own higher minimums for specific strategies, but ₹50 lakh is the regulatory floor nobody can go below.

On the other side of the table, SEBI also raised the minimum net worth required to operate as a portfolio manager from ₹2 crore to ₹5 crore — intended to ensure only adequately capitalized, serious players remain registered.

SEBI's 2020 rules replaced the older weighted-average return method with mandatory Time-Weighted Rate of Return (TWRR) reporting — a standardized way of measuring performance that isn't distorted by the timing of your own deposits and withdrawals, making it easier to compare one portfolio manager's track record against another's on a like-for-like basis.

The 2020 regulations also extended mandatory custodian appointments to all portfolio managers (holding your securities separately from the manager itself, as a safeguard), and required portfolio managers to offer investors a direct on-boarding option that doesn't require going through a distributor. Every SEBI-registered portfolio manager must also provide a formal Disclosure Document before you invest, and every registration can be independently verified on SEBI's own list of registered portfolio managers — always worth checking before you sign anything. If something does go wrong, investor grievances against a portfolio manager can be escalated through SEBI's SCORES platform.

This structure generally follows a fee arrangement similar to discretionary PMS — the extra involvement it asks of you doesn't automatically make it cheaper. Expect some combination of:

• A fixed annual management fee, commonly cited in the broad range of 1–2.5% of AUM.
• A performance fee, often 10–20% of profits generated above a hurdle rate — a minimum return threshold the manager must clear before earning a performance cut — sometimes charged instead of, or alongside, the fixed fee.
• An exit load for early withdrawal, typically in a low single-digit percentage range.

Exact numbers vary meaningfully by provider and strategy, so the fee schedule in the PMS Disclosure Document — not a marketing page — should always be your reference point before committing capital.

Everything above is the part most PMS providers would rather you skim past: the fine print, the fee ranges, the regulatory minimums, the fact that "non-discretionary" still means fees apply and outcomes aren't guaranteed. That inner clause — the detail buried in page fourteen of a Disclosure Document — is exactly where PMS Sahi Hai, India's APMI-registered, AI-powered PMS & AIF marketplace, is built to help.

Rather than pushing you toward a single house strategy, PMS Sahi Hai's platform is built around comparing every SEBI-registered PMS and AIF independently, with fees disclosed upfront — a transparent annual trail rather than a hidden commission, and no black-box recommendations. That philosophy runs through Nyra, PMS Sahi Hai's AI Wealth Compass, which evaluates 1,200+ investment strategies across seven pillars: returns, risk, fees, manager tenure, portfolio concentration, transparency, and AUM fit. For a category like non-discretionary PMS — where the difference between two providers' recommendation quality, responsiveness, and fee structure can matter as much as the discretionary-vs-non-discretionary decision itself — that side-by-side view replaces guesswork with a documented comparison.

It's worth being precise about what this is and isn't: Nyra provides structural and informational output to help you compare and understand your options — every figure it shows cites its source, from SEBI filings to fund factsheets — rather than personalised investment advice. In practice, that means you can walk in already knowing what a "reasonable" management fee looks like, what questions to ask about execution turnaround on your approvals, and how a given non-discretionary strategy's stated minimum and mandate actually compares to alternatives — before you're in a room with a relationship manager. You can see how PMS itself is framed on the platform at pmssahihai.com/what-is-pms, including its own breakdown of discretionary versus non-discretionary structures, or browse common questions on the PMS FAQ page.

As the platform puts it plainly: hard-earned wealth shouldn't rely on random advice — and that applies just as much to which PMS you choose as it does to whether this structure is the right fit for you in the first place.

• You retain final say. No transaction touches your capital without your explicit approval — a structural safeguard discretionary PMS simply doesn't offer.
• Professional research, without giving up control. You get a portfolio manager's analysis and trade ideas while still making the final call — a genuine middle path between full delegation and fully do-it-yourself investing.
• Recommendations can be filtered through your own context. Because every trade needs your sign-off, you can decline or adjust a recommendation that conflicts with your tax situation, existing holdings elsewhere, or sector preferences — something a discretionary mandate doesn't allow for.
• A broader investable universe than discretionary PMS. The ability to allocate up to 25% of AUM to unlisted securities opens doors — AIFs, REITs, InvITs, unlisted debt — that discretionary mandates structurally cannot access.
• A genuinely regulated, disclosure-driven framework. Standardized TWRR performance reporting, mandatory custodians, and a formal Disclosure Document mean a level of structural accountability that informal advice simply doesn't carry.
• A practical middle step for engaged investors. If you want to stay involved in markets and build your own judgment over time, rather than delegate everything or go fully solo, non-discretionary PMS keeps you in the loop while still providing expert input.

Most PMS content skips this part. It shouldn't.

• It demands your time and attention. Every recommended trade needs to be reviewed — there's no "set it and forget it" convenience the way there is with discretionary PMS, which can be a genuine burden for busy investors.
• Approval delay can cost you the price you wanted. Because execution waits on your consent, there's an inherent lag between when a manager spots an opportunity and when the trade actually goes through — in fast-moving markets, the price by the time you approve can differ meaningfully from the price when it was recommended.
• The entry barrier is steep. The SEBI-mandated ₹50 lakh minimum (up from ₹25 lakh) already rules out most retail investors, and some providers set their own strategy-specific minimums even higher.
• The "control" only pays off if you're equipped to use it. Meaningfully approving or declining a recommendation requires enough market literacy to judge it on its merits — without that, you risk either rubber-stamping everything (losing the actual benefit of control) or second-guessing sound advice out of emotion (undermining the strategy either way).
• Fees apply regardless of your extra involvement. A non-discretionary structure typically carries the same broad fee architecture as discretionary PMS — being more hands-on doesn't automatically mean paying less.

Portfolio management — including the research work behind non-discretionary recommendations — increasingly leans on optimization models, AI-backed predictive analytics, and machine-learning tools. Institutional-grade platforms like BlackRock's Aladdin, Qontigo Axioma, and Morningstar Direct are used industry-wide to help construct and stress-test portfolios against an investor's stated objectives and constraints, per TCS's analysis of AI in portfolio management.

It's worth being precise about where that technology currently stops, rather than overselling it: much of today's portfolio-optimization technology still produces a largely static, single set of optimized weights for a given time horizon, and still depends heavily on human portfolio managers to fine-tune decisions and respond to fast-moving, real-time market conditions. In other words, this is AI-assisted portfolio management, not AI-autonomous portfolio management — a distinction worth understanding before assuming "AI-powered" means "fully automated."

For non-discretionary PMS specifically, technology's most visible impact on your actual day-to-day experience isn't in the underlying research alone — it's in how quickly a recommendation reaches you, how clearly the reasoning is communicated, and how easy it is to track which of your approvals were executed and how they've performed since. That's also precisely the layer where a technology-led comparison and decision-support platform adds value that sits alongside — not instead of — the portfolio management itself.

It tends to make the most sense if you:

• Have ₹50 lakh or more to commit to a single strategy and won't need that capital on short notice.
• Want professional research and trade ideas, but aren't comfortable ceding full control the way discretionary PMS requires.
• Have enough market familiarity to evaluate a recommendation quickly and meaningfully — not just rubber-stamp it.
• Have specific constraints (tax, concentration, sector exclusions) that make a one-size-fits-all discretionary mandate a poor fit.
• Are comfortable being reachable and responsive, since execution depends on your timely approval.

It tends to make less sense if you:

• Want a genuinely hands-off, "set it and forget it" experience — discretionary PMS is the more natural fit.
• Don't have the time or market knowledge to meaningfully evaluate recommendations as they arrive.
• Are working with less than the ₹50 lakh regulatory minimum — mutual funds or advisory-only services may be more appropriate starting points.

It occupies a genuinely useful middle ground: professional research and execution support, without handing over the keys entirely. It's not the right fit for every investor — the ₹50 lakh minimum, the time commitment, and the approval-lag tradeoff are all real — but for investors who want expert input while keeping their hand on the final decision, it's a structurally sound, SEBI-regulated way to invest.

The harder part usually isn't deciding whether non-discretionary PMS as a category makes sense — it's working out which SEBI-registered portfolio manager, strategy, and fee structure actually fits your goals, especially once you're comparing multiple Disclosure Documents that are each trying to look as favorable as possible. That's the specific problem PMS Sahi Hai and Nyra are built to solve — an independent, source-cited comparison across every registered PMS and AIF, so the decision is based on your numbers, not a relationship manager's pitch deck. If you're ready to see how your options stack up, you can compare PMS strategies with Nyra or start with a broader primer on what PMS actually is.