IFSC notifies updated FME Regulations

The International Financial Services Centres Authority (IFSCA) on 19 February 2025, has notified the updated IFSCA (Fund Management) Regulations, 2022. Most of them are in line with the changes proposed in December 2024.

Here’s a quick summary of the new provisions for funds in GIFT IFSC:

Non-retail schemes (Venture Capital Schemes and AIFs)

• Minimum scheme corpus reduced to USD 3 Mn from USD 5 Mn. For open-ended schemes, investment can commence at USD 1 Mn, with the minimum corpus achieved within 12 months.
• FME contribution in schemes increased to 100% (subject to the condition that the FME/its associates and their UBOs are non-residents in India, and the scheme does not invest more than 1/3rd of its corpus in any single company and its associates).
• Joint Investments by related individuals now permitted

Manpower requirements for FMEs

• FMEs managing AUM exceeding USD 1 Bn must appoint an additional KMP.
• All employees of FMEs will be required to undergo certifications from institutions prescribed by IFSCA
• The requirement for obtaining prior approval from IFSCA for appointing Key Managerial Personnel (KMPs) has been removed. Going forward, FMEs only need to inform IFSCA about such appointments after they are made.
• Following amendments made to PO / KMP’s educational qualification and experience requirements: a) The required post-graduate diploma duration has been reduced from 2 years to 1 year. b) CFA or FRM certifications are now accepted as educational qualifications. c) If a PO has 15 years of relevant work experience, a graduate degree is enough. d) For the 5-year experience requirement, consultancy experience in fund management (e.g., deal due diligence, transaction advisory) is now considered. However, only up to 2 years of consultancy experience will count, and the remaining 3 years must be in other specified areas as per the regulations.

Retail Schemes

• Track record evaluation criteria for Registered FMEs (Retail) expanded to consider group experience collectively
• Listing of close-ended schemes on recognized exchanges is now optional if the minimum investment per investor is at least USD 10,000

Others

• Funds in IFSC (subject to exceptions) now mandated to appoint a custodian
• Temporary investments may be made in bank deposits / overnight schemes
• Minimum ticket size for PMS reduced to USD 75,000 from USD 150,000

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Priya Kapasi Shah

Associate Partner | Tax & Regulatory | priya.k@treelife.in

Heads Treelife’s Financial Advisory practice, specializing in investment structuring, cross-border transactions, and tax and regulatory advisory. Also leads on AIF setups and advisory services for GIFT IFSC.