Understanding the Extension of Timeline for Custodian Appointments under IFSCA Fund Management Regulations

👥 Who This Affects

This update is meant for all Fund Management Entities (FMEs) operating in the International Financial Services Centres (IFSCs) – especially those managing:

• Retail schemes

• Open-ended restricted schemes

• Any schemes managing Assets Under Management (AUM) over USD 70 million

📜 What Does Regulation 132 Say?

As per Regulation 132 of the IFSCA (Fund Management) Regulations, 2025:

• FMEs must appoint an independent custodian to provide custodial services for specific types of schemes.

• The custodian must be based in an IFSC, unless laws of the investee company’s country require otherwise.

  
  

  

  
  

⏳ What’s New? Extension Granted!

Some fund managers found it challenging to appoint IFSC-based custodians within the original timeline. Responding to this, IFSCA has now granted an additional 6 months to comply with the custodian appointment requirement.

✅ Extension Details:

1. Who gets the extra 6 months?

   • Schemes recorded after Feb 19, 2025 (the date FM Regulations came into effect).

   • Schemes recorded before Feb 19, 2025, that had not yet entered into custodian agreements.

2. Temporary Option During These 6 Months:

   • FMEs can appoint custodians in India or any foreign jurisdiction — but these custodians must be regulated by that country’s financial regulator.

   • All arrangements must be transparent and information must be shared with IFSCA when asked.

3. Final Deadline:

   • FMEs must appoint an IFSC-based custodian by the end of the 6-month extension period — no further delay allowed.

🔍 Why This Matters

This move balances regulatory compliance with industry practicality, ensuring that fund managers get enough time to adapt without compromising on oversight or investor protection.

🧾 Final Takeaway

If you're a fund manager operating in GIFT City or another IFSC, now’s the time to:

• Review your custodian arrangements

• Make necessary transitions

• Ensure full compliance by the deadline

This is a critical step toward strengthening IFSC as a globally trusted investment jurisdiction.