How Are Securities Held in Portfolio Management Services? Complete Guide for Residents & NRIs

Tuesday, Dec 2, 2025

In a SEBI-registered PMS, your securities are always held in demat accounts in your own name with an approved custodian/DP, while your funds sit in designated bank accounts (pool/PIS/NRE/NRO) linked to the PMS structure, not in the PMS provider’s personal bank account. The exact bank-account setup differs for resident and NRI clients, but legal ownership of securities remains with you in both cases.

Resident investor

● Shares and other listed securities are held in a demat account opened specifically for the PMS with a custodian or depository participant (e.g., a large bank), with the demat in your name and PAN, and assets segregated client-wise as required by SEBI.
● Cash you transfer to the PMS typically goes into a PMS pool bank account maintained by the portfolio manager with a scheduled commercial bank, separate from the manager’s own funds and used only for client investments and related credits/debits.

NRI investor

● For NRIs, a dedicated NRE or NRO bank account (and often PIS-designated where applicable) is opened solely for PMS investments; the PMS and its banking partner use this account structure to route your funds in and out as per FEMA/RBI rules.
● Your equity and other securities are again held in a custodian demat account tagged to you (often with the same bank acting as custodian), with your holdings recorded separately from other PMS clients and from the PMS provider’s proprietary assets.

Key regulatory points

● SEBI regulations mandate that portfolio managers segregate each client’s funds and securities from their own and maintain separate client-wise accounts, whether the client is resident or NRI.
● Portfolio managers may maintain a combined bank account for all clients’ funds, but it must be a distinct “clients’ funds” account with proper records of all client-wise credits, debits, dividends, interest, and corporate action benefits.

Simple table view

Aspect	Resident PMS client	NRI PMS client
Where shares are held	Client-specific demat with custodian/DP in your name.	Client-specific demat with custodian/DP in your name.

Where cash is held	PMS pool/clients’ bank account with scheduled bank.	NRE/NRO (often PIS) account plus PMS clients’ bank account as per setup.
Legal owner of securities	Always the client (you), not the PMS.	Always the client (you), not the PMS.