The recent amendments made by the International Financial Services Centres Authority (IFSCA) in the Fund Management Entity (FME) rules at Gift IFSC have brought about significant changes to the fund management landscape. These changes are aimed at making Gift IFSC more attractive for fund managers and investors alike.
One of the key changes introduced is the reduction of the minimum corpus requirement for schemes from $5 million to $3 million. This will lower the barrier to entry for new fund managers and allow them to start investment activities sooner. Additionally, the minimum investment amount for Portfolio Management Services (PMS) has been halved to $75,000, making it more accessible for a wider range of clients.
The amendments also provide greater flexibility for fund managers in terms of their operational activities. For example, the requirement to appoint key managerial personnel with prior approval from IFSCA has been removed. Fund Management Entities (FMEs) are now also allowed to open branch or representative offices in other jurisdictions for marketing purposes without prior approval.
For non-retail schemes, the amendments allow FMEs and their associates to invest up to 100% in a scheme, provided that the investors are not residents in India. This will provide greater flexibility for fund managers in managing their non-retail schemes. For retail schemes, the criteria for experience and investor base can be evaluated based on the experience of the FME, its holding company, or subsidiaries.
Overall, these amendments are expected to make Gift IFSC more competitive and aligned with global financial hubs. The relaxed regulations, lower entry barriers, and increased operational flexibility will likely attract more fund managers to set up shop at Gift IFSC and provide existing players with the agility needed to scale efficiently.
