Discretionary PMS clients can pledge securities for personal loans; pledged assets can remain part of AUM, SEBI says in informal guidance

SEBI has issued informal guidance stating that discretionary Portfolio Management Services clients can pledge securities for personal loans. This means that if a client pledges securities to obtain a loan, the pledged assets can still be included in the overall assets under management. This development is significant for the financial services industry as it provides clarity on how to handle pledged securities in AUM calculations. It may also impact the way discretionary PMS clients manage their assets and obtain loans.

Why it matters

SEBI's informal guidance on discretionary PMS clients pledging securities for personal loans provides clarity on the issue. This could lead to increased activity in the PMS space, but the impact is likely to be limited.

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