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Sebi clarifies rules on pledging securities for discretionary PMS clients to raise loans
Economic Times 3 hrs ago·18 Aug 2026, 1:04 am
The Securities and Exchange Board of India (Sebi) has clarified that clients of discretionary portfolio management services can pledge their securities to raise loans. This rule change confirms that investors remain the beneficial owners of their assets, even when a manager handles the trading. It effectively removes the ambiguity that previously existed regarding the use of these holdings as collateral for personal borrowing.
This clarification is significant for investors as it provides greater liquidity and flexibility. It allows clients to unlock the value of their portfolio without needing to sell their shares. However, investors must still be aware of the inherent risks involved in pledging securities, including the potential for margin calls if the value of the collateral drops.
Going forward, investors should review the specific terms of their portfolio management agreements. They should also monitor market volatility closely, as the value of the pledged securities can fluctuate. It is advisable to consult with a financial advisor to understand the full implications of pledging assets before proceeding.
Key takeaways
- Category: Stocks.
- Assessed as a significant, market-relevant update.
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