SEBI clarified that clients under Non-Discretionary PMS can pledge their shares for personal borrowing. This decision safeguards clients' rights without classifying it as borrowing by portfolio managers.
SEBI Allows Pledging of Shares by ND-PMS Clients
On May 27, 2026, SEBI announced that clients enrolled in Non-Discretionary Portfolio Management Services (PMS) may pledge securities held in their demat accounts for personal borrowing. This clarification is crucial for maintaining the autonomy of clients while ensuring regulatory compliance.
The regulator emphasized that such pledging does not constitute borrowing by the portfolio manager, provided the decision to pledge is fully client-driven. This distinction is critical for preserving the integrity of the PMS framework and ensuring client rights are upheld.
Practitioners should advise clients in the PMS space about this ruling, as it opens avenues for leveraging investments while maintaining compliance with existing regulations.
