The India International Financial Services Centres Authority has notified the IFSCA (Fund Management) Regulations, 2025, replacing the IFSCA (Fund Management) Regulations, 2020 and resetting the rulebook for fund management entities (FMEs), schemes and portfolio management services in GIFT IFSC. The updated framework follows a consultative review and is positioned around simplifying compliance, clarifying regulatory intent and adding investor-protection safeguards. For non-retail and retail schemes, the minimum scheme corpus has been reduced to USD 3 million from USD 5 million, with additional flexibilities for open-ended schemes, including the ability to commence investments on reaching USD 1 million and achieving the USD 3 million minimum corpus within 12 months; the validity of a scheme’s private placement memorandum has also been increased to 12 months from IFSCA’s communication taking it on record. The rules permit FME and associate contributions up to 100% of a scheme (subject to conditions) and restrict schemes from transacting with associates, other schemes of the FME or its associates, or a major investor (committed at least 50% of corpus) without prior approval from 75% of investors by value, with the major investor excluded from voting where conflicted. Fund of funds schemes receive carve-outs, including exemptions from independent valuation and IFSC custodian requirements where the underlying fund already has these arrangements, and the definition of “fund of funds scheme” has been amended; retail scheme provisions also make listing of close-ended retail schemes optional where each investor invests at least USD 10,000. For FMEs, prior IFSCA approval for key managerial personnel (KMP) appointments has been removed in favour of intimation, FMEs with at least USD 1 billion in assets under management (excluding fund of funds AUM) must appoint an additional KMP within six months of the financial year-end, KMP eligibility criteria have been broadened, and FME employees must undergo certifications from institutions specified by IFSCA. Portfolio management services rules lower the minimum investment to USD 75,000 from USD 150,000 and allow client funds to be transferred to a designated broking account managed by the FME, subject to safeguards; other changes include a 12-month compliance window for IFSC custodian appointment, streamlined fit-and-proper criteria, expanded options for parking funds (including bank deposits and overnight schemes), and permission for FMEs to open overseas branches or representative offices for marketing and client service on an intimation-only basis. IFSCA will issue a circular shortly setting out timelines and formats for KMP appointment intimations. The regulations also build in specified compliance windows for particular requirements, including 12 months for meeting the IFSC custodian requirement.

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