The International Financial Services Centres Authority (IFSCA) on August 03, 2026, issued Frequently Asked Questions (FAQs) on International Financial Services Centres Authority (Fund Management) Regulations, 2025.
The IFSCA (Fund Management) Regulations, 2025 establish a framework for Fund Management Entities (FMEs) operating in International Financial Services Centres (IFSCs), categorizing them into three tiers based on scope of activity: Authorised FME (limited to Venture Capital Schemes and Family Investment Funds), Registered FME (Non-Retail) (which can additionally set up Restricted Schemes and offer Portfolio Management Services), and Registered FME (Retail) (which can further launch Retail Schemes and Exchange Traded Funds). Each category carries distinct net worth requirements (ranging from USD 75,000 for Authorised FMEs to USD 1-2 million for Retail FMEs), staffing obligations (Principal Officer, Compliance Officer, and fund management KMPs), and eligibility criteria tied to track record, professional qualifications, and infrastructure standards.
The regulations detail four principal scheme types available to investors. Venture Capital Schemes and Restricted Schemes (covering Category I, II, and III Alternative Investment Funds) cater to accredited or high-net-worth investors through private placement with a "Green Channel" filing process, while Retail Schemes and ETFs are open to the general public with stricter investor-protection safeguards, such as diversification limits and mandatory listing for ETFs. Each scheme type has specific rules on minimum corpus (typically USD 1-3 million), investor caps, tenure, leverage, NAV computation frequency, and mandatory "skin-in-the-game" contributions by the FME itself. Special variants like Angel Funds, Special Situation Funds, and Family Investment Funds address niche use cases such as early-stage startup investing, insolvency resolution, and single-family wealth management.
Beyond scheme creation, FMEs may offer Portfolio Management Services, act as investment managers for Investment Trusts (REITs/InvITs), and provide Third-Party Fund Management Services on behalf of overseas fund managers, each carrying its own governance, disclosure, and net-worth add-ons. The regulations also build in accommodations for specific investor classes: Sovereign Wealth Funds receive relaxed contribution and custodian requirements, the Indian diaspora (NRIs/OCIs) benefit from a streamlined route to invest up to 100% of an IFSC fund's corpus into Indian securities, and Accredited Investors are exempted from standard minimum investment thresholds across scheme types, subject to defined income, net-worth, or institutional eligibility criteria.
Finally, the framework imposes robust governance and compliance obligations — including recordkeeping (up to eight years), custodian appointments, cyber-resilience standards, business continuity planning, and a prescribed Code of Conduct — enforced through Authority-led inspections. A detailed fee schedule (updated via a March 2026 circular) governs application, registration, and recurring charges for FMEs and each scheme type, with penalty interest for late payment. Regulation 145 also carves out an innovation sandbox allowing exemptions from standard provisions for testing new products or strategies, capped at 18 months and barred from soliciting public money during the trial period. The FAQs reflect regulatory positions current as of June 30, 2026.
