India markets regulator proposes allowing AMCs to advise pooled funds

India's markets regulator on Monday proposed a rule change that would allow asset management companies (AMC) to offer investment management and advisory services to pooled funds such as family offices or offshore funds with a few investors.

Under current rules, AMCs are barred from managing or advising such non-broad-based pooled funds unless they hold a Portfolio Management Services license.

This restriction was implemented in 2011 to prevent conflicts of interest, particularly concerning fees. While mutual fund fees are regulated, private funds can have performance-linked or negotiable fees.

Under the new proposal, portfolio management and advisory services offered can be offered through a separate unit of the asset management company, as long as it has its own dedicated team of key personnel, the Securities and Exchange Board of India said on Monday.

The proposed changes are subject to strong governance and regulatory controls that would address any conflict of interest, especially for retail mutual fund investors, SEBI said.

The regulator said it was inviting public and industry feedback before implementing any changes.