The Securities and Exchange Board of India (SEBI) is set to launch a new investment scheme positioned between mutual funds and Portfolio Management Services (PMS). While the structure will be similar to mutual funds, the minimum investment amount is targeted to be at least Rs 10 lakh.

Currently, the minimum investment for PMS is Rs 50 lakh. The new scheme is designed for those seeking higher risk and larger investment amounts. It also aims to curb illegal investment projects.

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SEBI's consultation paper highlights the importance of regulating the growing number of unregistered and unauthorized investment products in the market. To address this issue, SEBI proposes setting a minimum investment threshold of Rs 10 lakh for  (PMS) providers. 

This move aims to discourage retail investors from investing in these products, while simultaneously attracting investors who are currently opting for unauthorized PMS providers. By setting this threshold, SEBI seeks to strike a balance between protecting retail investors and encouraging investments in legitimate and regulated investment products. 

Mutual funds with an Assets Under Management (AUM) of Rs 10,000 crore will be eligible to start the scheme. Asset Management Companies (AMCs) with Rs 5,000 crore in assets and ten years of operational experience may also be considered.

Subject to certain conditions, derivative transactions for purposes other than hedging and portfolio rebalancing will be permitted. Investment options will include both short- and long-term equity funds and ETFs. The scheme will also offer SIP, SWP, and STP facilities.

The new scheme may allow more flexibility in the current norms for mutual funds. Changes in investment limits for debt schemes, REITs, and INVITs are also anticipated.