The Gujarat International Finance Tec-City (GIFT City) has introduced significant regulatory changes to enhance its financial ecosystem. In a recent circular, the International Financial Services Centres Authority (IFSCA) announced the reduction of the minimum investment size in Portfolio Management Services (PMS) from USD 150,000 (₹1.30 crore) to USD 75,000 (₹65 lakh). This move aligns with the finance ministry’s objective of reducing compliance costs and simplifying regulations.
Alongside this change, IFSCA has implemented multiple reforms in fund management, venture capital, and manpower requirements to improve market accessibility. Below is an overview of the revised Fund Management Regulations 2025.
Key Revisions in Fund Management Regulations 2025
Non-Retail Schemes: Venture Capital & Restricted Schemes
The revised framework aims to enhance fundraising flexibility and increase investment opportunities for fund management entities (FMEs):
- The minimum corpus requirement was reduced from USD 5 million (₹43.36 crore) to USD 3 million (₹26 crore).
- The validity of the Private Placement Memorandum (PPM) was extended to 12 months, facilitating smoother fundraising.
- Open-ended schemes are allowed with a minimum corpus of USD 1 million (₹8.67 crore), provided they raise USD 3 million (₹26 crore) within 12 months.
- FMEs can now invest up to 100% in their group schemes, up from the previous cap of 10%, subject to 75% approval from existing investors.
Reforms in Manpower Requirements
To strengthen fund management and operational oversight, IFSCA has introduced new staffing and certification mandates:
- FMEs managing assets over USD 1 billion (₹8,674 crore) must appoint an additional Key Managerial Personnel (KMP) within six months.
- Employees of large-sized FMEs must obtain certifications from IFSCA-specified institutions to ensure regulatory compliance and expertise.
Retail Schemes & Alternative Investment Funds (AIFs)
Regulatory flexibility has been introduced for retail and alternative investment funds to enhance investor participation:
- The minimum corpus requirement was reduced to USD 3 million (₹26 crore), providing more flexibility for fund structuring.
- Retail Fund of Funds (FoFs) are exempted from single-sector and single-company restrictions if the underlying fund meets investment norms.
- Individual investments exceeding USD 10,000 (₹8.67 lakh) no longer require stock exchange listing, simplifying investor participation.
Other Developments and Compliance Relaxations
Beyond fund management, IFSCA has introduced measures to streamline compliance and facilitate global expansion for fund houses:
- FMEs will now have 12 months to comply with regulatory requirements, offering a more practical transition period.
- Global expansion rules have been eased, allowing FMEs to open overseas branches for marketing purposes without prior IFSCA approval.
- FMEs can park funds in bank deposits and overnight schemes for short-term liquidity management.
Conclusion
The revised fund management regulations at GIFT City mark a step towards making India’s International Financial Services Centre more competitive and investor-friendly. With reduced investment thresholds, greater regulatory flexibility, and eased compliance requirements, these reforms are expected to attract more global and domestic investors.
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