In another development in the world of financial regulation, the Securities Exchange Board of India (SEBI) has banned two PMSs, or Portfolio Management Services, from onboarding new customers.
SEBI Bans PMS From Onboarding
Scient Capital And DGS Capital Management were proscribed from carrying out business after in a two separate interim orders from SEBI.
This came to pass after the regulator found that the companies had failed to reach the minimum net worth requirement of Rs 5 crore.
In another development in the world of financial regulation, the Securities Exchange Board of India (SEBI) has banned two PMSs or Portfolio Management Services, from onboarding new customers. | Representative Image/File
Here, Mumbai-based Scient Capital has assets under management (AUM) of Rs 66.8 crore as of December 2024. DGS Capital had an AUM of Rs 201.03 crore in December 2024.
Apart from onboarding new customers, SEBI has also stopped these two companies from accepting additions from alternative funds and securities.
A PMS, or Portfolio Management Service Company, is a financial service company that aids investment through a personalised approach, further helped by research-based strategic planning that is managed by experts.
When it comes to the minimum net worth that these companies need to have, is mandated under the Portfolio Managers Regulations.
This rule helps to ensure that PMSs have sufficient fiscal stability.
It also shows the availability of resources, that could help manage client funds effectively and safely.
Here, Mumbai-based Scient Capital has assets under management (AUM) of Rs 66.8 crore as of December 2024. DGS Capital had an AUM of Rs 201.03 crore in December 2024. |
No Minimum Net Worth
In the order for Gurugram-based DGS Capital, SEBI said "As detailed in the above paragraphs, the Noticee acted as a registered Portfolio Manager without meeting the minimumcapital adequacy requirement (net worth of ₹5 Crores) as mandated under the Portfolio Managers Regulations. It is noteworthy that despite lapse of more than two yearssince the end of timeline for meeting the regulatory requirement of net worth(i.e., January 15, 2023), the Noticee has shown no progress towards compliance."
The order further added, "Every registered intermediary is required to comply with the statutory requirements laid down by SEBI. Non-compliance with the obligations under the Portfolio Managers Regulations and the SEBI Circulars weakens the regulatory framework. Net worth requirements are critical for ensuring operational solvency and safeguarding client interests."
