IFSCA Fund Management Regulations 2025 – A New Era of Investment Management via GIFT CITY.

Introduction

The International Financial Services Centre Authority (IFSCA) has introduced the Fund Management Regulations, 2025, ushering in a new phase for fund managers, investors, and financial entities operating in the GIFT IFSC (Gujarat International Finance Tec-City). These regulations replace the IFSCA Fund Management Regulations, 2020, with the goal of simplifying processes, enhancing business ease, and strengthening investor protections, Fund Management via gift city.

10 Key Reforms in FM Regulations 2025

1. Lower Barriers for Non-Retail Schemes

• The minimum corpus requirement for Venture Capital Schemes & Restricted Schemes has been reduced from $5 million to $3 million, making fund management more accessible.

• Open-ended schemes can now start investment activities with just $1 million, provided they meet the $3 million minimum corpus within 12 months.

• FMEs (Fund Management Entities) or their associates can now invest up to 100% in a scheme, subject to conditions.

2. Streamlined Rules for Retail FMEs & Investors

• The ‘sound track record’ requirement for Retail FMEs now considers the experience of other entities in the group, making it easier for new fund managers to enter.

• The minimum corpus for Retail Schemes has also been reduced from $5 million to $3 million.

• Flexibility for fund-of-funds, index, sectoral & thematic schemes, ensuring smoother operations.

3. Portfolio Management Services (PMS) Made More Accessible

• Minimum investment for PMS reduced from $150,000 to $75,000, encouraging broader participation.

• Investors can now transfer funds into a designated broking account, managed under PMS, increasing efficiency.

4. Manpower & Operational Flexibility for FMEs

• No prior IFSCA approval needed for appointing Key Managerial Personnel (KMPs)—only an intimation is required.

• FMEs managing over $1 billion AUM (excluding fund-of-funds) must appoint one additional KMP within six months.

• Employees of FMEs must undergo certifications from specified institutions to ensure continuous professional competence.

5. Easing Global Expansion & Compliance

• FMEs can open branches/representative offices in other jurisdictions for marketing & client services without prior IFSCA approval—only an intimation is required.

• Fund managers now have 12 months to comply with custodian appointment requirements, making transition smoother.

• Bank deposits & overnight schemes now permitted for pending deployment of funds.

6. Enhanced Transparency & Investor Safeguards

• Transactions between a scheme & its associates, other schemes, or major investors (holding 50%+ corpus) now require 75% investor approval (excluding the major investor).

• This reduces conflicts of interest and enhances investor confidence.

7. Clarity on Custodian Appointment

• FMEs now have 12 months to comply with the mandatory custodian appointment rule.

• Exemption for Fund of Funds (FoF) if the underlying fund already has a custodian, reducing duplication and costs.

8. Simplified "Fit & Proper" Criteria for Fund Managers

• The eligibility requirements for fund managers have been streamlined to attract global talent.

• This ensures better compliance while widening the talent pool for fund management roles.

9. Listing of Retail Schemes Now Optional

• Previously, close-ended retail schemes had to be listed on stock exchanges.

• Now, listing is optional if each investor contributes at least $10,000, offering flexibility to fund managers.

10. Global Expansion Without Red Tape

• FMEs can now open overseas branches or representative offices without prior IFSCA approval—only an intimation is required.

• This helps Indian fund managers scale internationally while staying IFSC-compliant.

Why This Matters

The IFSCA Fund Management Regulations, 2025, are a game-changer for fund managers, investors, and global financial firms looking to expand operations in IFSC. With simplified compliance, lower investment thresholds, and enhanced flexibility, these reforms align GIFT IFSC with global financial hubs while prioritizing investor protection.

Disclaimer: This post is for general informational purposes only and not a substitute for professional advice. We do not guarantee the accuracy, completeness, or reliability of the information. Use at your own risk. We are not liable for any loss or damage arising from its use. Consult professionals for your specific situation.