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The Gujarat International Finance Tec-City (GIFT City), in a recent circular, has reduced the minimum investment size in the PMS to USD 75,000 (Rs. 65 lakh) from the previous limit of USD 150,000 (Rs. 1.30 crore).
The circular is in line with the finance minister Nirmala Sitharaman’s emphasis on reducing compliance costs and simplifying regulations.
Apart from the minimum investment size, the International Financial Services Centres Authority’s (IFSCA) has initiated various regulatory changes to bring uniformity in fund management principles.
Here are the revised Fund Management Regulations 2025.
Non-Retail Schemes (Venture Capital & Restricted Schemes)
- Reduction in minimum corpus requirement from USD 5 million (Rs. 43.36 crore) to USD 3 million (Rs. 26 crore)
- Increase in Private Placement Memorandum (PPM) validity to 12 months which will support fundraising
- Fund Management Entities (FMEs) can start open ended schemes with a minimum corpus of USD 1 million (Rs. 8.67 crore). However, the entities will have to raise USD 3 million (Rs. 26 crore) within 12 months
- FMEs can invest up to 100% in their group schemes (previously capped at 10%)
- However, for this, FMEs will have to get 75% approval from existing investors
Reforms around manpower requirements
- FMEs with AUM of more than USD 1 billion (Rs. 8,674 crore) must appoint an extra Key Managerial Personnel (KMP) within six months
- Also, these large sized FMEs’ employees must obtain certifications from IFSCA-specified institutions
Retail schemes & Alternative Investment Funds (AIFs)
- Reduction in minimum corpus requirement to USD 3 million (Rs. 26 crore) for greater flexibility
- Retail FoFs exempt from single-sector and single-company restrictions if the underlying fund meets investment norms
- Individual investment of more than USD 10,000 (Rs. 8.67 lakh) will not be required to list on stock exchanges
Other developments
- The fund management entities will now be given 12 months to comply with the compliance
- Relaxing the global expansion rules, the FMEs are allowed open branches abroad for marketing without prior IFSCA approval
- FMEs can park funds in bank deposits and overnight schemes for short term
