IFSCA approves key regulatory reforms across Funds, Capital Markets and Global In-House Centres

The International Financial Services Centres Authority (“IFSCA”) at its 26^th Authority Meeting held on 22^nd December 2025, approved a range of regulatory amendments and new frameworks aimed at enhancing the ease of doing business and strengthening the regulatory ecosystem at GIFTIFSC. Key decisions include:

• Amendments to IFSCA (Fund Management) Regulations, 2025.
• Approval of the draft IFSCA (Global In-House Centre) Regulations, 2025.
• Deletion of sub-regulation (12) of IFSCA (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) Regulations, 2024.
• Amendment to IFSCA (Capital Market Intermediaries) Regulations, 2025.
• Amendment to definition of ‘Lloyd’s Service Company’ under IFSCA (Registration of Business) Regulations, 2021.

Amendments to IFSCA (Fund Management) Regulations, 2025

IFSCA has approved certain amendments to the IFSCA (Fund Management) Regulations, 2025 “FM Regulations”. These amendments are intended to address operational challenges faced by Fund Management Entities (“FMEs”) and to further enhance the ease of doing business in GIFTIFSC, while continuing to safeguard investor interests.

1. Eligibility criteria for Key Managerial Personnel (“KMPs”)

• The IFSCA has relaxed the work experience requirements prescribed for KMPs. In addition to the existing eligibility framework, a certification-based alternative eligibility criterion has been introduced. This alternative pathway permits appointment of KMPs with a reduced work experience threshold, subject to possession of specified professional certifications. The change is expected to widen the talent pool available to FMEs.
• Furthermore, the scope of organisations whose work experience may be considered relevant for KMP appointments has been expanded. Eligible experience will now include experience gained in consulting firms, advisory firms, and private or public companies, provided the nature of work undertaken is related to functions typically performed in financial institutions. Importantly, this expanded scope of eligible work experience will apply both to the existing eligibility criteria and to the newly introduced certification-based alternative criterion.

2. Validity of Private Placement Memorandum (“PPM”) for Venture Capital and Restricted Schemes.

• In recognition of evolving market conditions and the practical realities of fundraising cycles, the regulatory framework governing the validity of PPMs for Venture Capital and Restricted Schemes has been significantly liberalised.
• The earlier limitation that permitted only a one-time extension of PPM validity has been removed. FMEs are now allowed to seek multiple extensions of six months each for Venture Capital Schemes and Restricted Schemes. This flexibility is subject to compliance with prescribed conditions, including payment of applicable fees and timely filing of the extension request while the PPM remains valid. This change is expected to provide much-needed operational leeway to managers navigating prolonged or staggered capital-raising environments.

Revival window for expired PPMs:

• A one-time extension window of 3 months has been introduced for schemes whose PPMs have already expired. This relaxation applies not only to expired Venture Capital and Restricted Schemes but also covers open-ended schemes that have commenced investment activities upon raising USD 1 million and have not been able to achieve the minimum required corpus of USD 3 million within the stipulated tenure. The measure offers a remedial opportunity to regularise such schemes without immediate regulatory disruption.

Investor protection provisions for open-ended schemes

• Recognising the heightened risk profile associated with open-ended schemes that begin investing before achieving the minimum corpus of USD 3 million, specific investor protection provisions will be introduced. These provisions are intended to safeguard investor interests in scenarios where the scheme has commenced investments with USD 1 million but ultimately fails to reach the USD 3 million threshold.

3. Appointment of Custodians registered with IFSCA.

The FMEs which are mandatorily required to appoint a custodian based in IFSC, shall be provided a 24-month migration window, subject to certain conditions.

• IFSCA (Global In-House Centre) Regulations, 2025

Currently Global In-House Centres (“GICs”) operate under the IFSCA (Global In-House Centres) Regulations, 2020. The following are the Key features introduced under the revised IFSCA (Global In-House Centre) Regulations, 2025 (“GIC Regulations”):

1. Financial Institution Group may now set up a GIC unit either directly or through a third-party service provider. This enables group entities to access GIC services without being constrained to a single operational model, thereby lowering entry barriers and improving ease of doing business.
2. The regulation has formally recognised modern operating models including, Captive Centre, Shared Services Centre, Build-Operate-Transfer (BOT), Joint Venture, Hybrid, and other models. This removes earlier structural rigidity and allows alignment with global group strategies.
3. GIC units may now provide services to group entities located in India, subject to a cap of 10% of total annual revenue. This measured relaxation ensures that GICs remain primarily outward-facing while still allowing limited servicing of domestic group entities, thereby enhancing operational flexibility without diluting the IFSC’s international orientation.
4. Financial Institution Groups that are currently operating from offshore locations and servicing their Indian entities are now enabled to establish GICs in GIFT IFSC for providing such services. This is expected to encourage onshoring of high-value services to India while maintaining regulatory clarity and oversight.
5. the regulations ease the earlier restriction on the 20% cap on the transfer of employees to GIFT IFSC. This relaxation supports smoother talent mobility and enables GIC units to attract experienced personnel, which is critical for maintaining service quality and operational continuity during the establishment and scaling phases.
6. Expanded the role of Third-party service providers to facilitate set-up, support operations, and participate in co-delivery models of GIC Units.
7. The GIC Regulation, 2025 provides explicit clarity on the categories of service recipients, service providers, and the range of permissible services that GIC units may undertake. This reduces interpretational uncertainty and helps entities structure their operations in compliance with regulatory expectations.
8. The framework further lays down clear eligibility criteria, streamlined registration processes, and detailed governance and fit-and-proper requirements for GIC units. It also clarifies the permitted currency of operations, reporting obligations, and the scope of supervisory oversight, while ensuring that compliance, risk management, and control standards are maintained.
9. The revised Regulation has provided a structured transition mechanism for existing GIC Units, ensuring business continuity, and orderly alignment with new regulatory framework.

• IFSCA (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) (Amendment) Regulations, 2024

The IFSCA approved a proposal to delete sub-regulation (12) of the IFSCA (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) Regulations, 2024 (“BATF Regulations”).

The deleted provision mandated that a BATF Service Provider maintain office space with a minimum carpet area of 60 sq. ft. per employee to operate from GIFT-IFSC. The removal of this requirement is intended to lower entry barriers, as mandatory office space norms increase fixed costs, deter new entrants, and potentially hinder the growth of the BATF ecosystem in the IFSC. This is expected to enhance ease of doing business, improve competitiveness, and support the development of professional services ecosystem at GIFT-IFSC.

• IFSCA (Capital Market Intermediaries) (Amendment) Regulations, 2025 (“CMI Regulations”)

1. Eligibility criteria for Principal Officer & Compliance Officer

The regulations now recognise postgraduate degrees in fintech, science, technology, engineering, and mathematics (STEM) disciplines as eligible qualifications, in addition to traditional finance, law, and management backgrounds for the positions of Principal Officer (PO) and Compliance Officer (CO). This change reflects the increasing role of technology in capital markets and enables intermediaries to appoint professionals with strong technical expertise.

Further, the minimum experience requirement for graduates to be appointed as PO or CO has been reduced from 10 years to 5 years, thereby widening the talent pool.

2. Capital Market Intermediaries with multiple registration.

Capital Market Intermediaries (“CMIs”) registered as broker-dealers, investment advisers, research entities, clearing members, depository participants, custodians, or distributors are now permitted to appoint the same individual as Principal Officer across these registrations. However, where the entity undertakes distribution-related business activities, a separate official must be appointed as the vertical head for distribution. This relaxation reduces duplication of senior management roles and compliance costs, while the requirement of a separate distribution head ensures enhanced oversight in areas prone to higher conduct and mis-selling risks.

3. Clarification on “Liquid Net Worth”

The amendments also provide clarifications regarding the computation of liquid net worth.

• Base minimum capital and interest-free deposits placed by broker-dealers and clearing members with stock exchanges and clearing corporations are now explicitly recognised as part of liquid net worth.
• Additionally, margins maintained with stock exchanges in the IFSC or under Global Access arrangements are also included in liquid net worth.
• Further, since the definition of “net worth” under the CMI Regulations does not take liabilities into account, all liabilities are to be excluded while calculating liquid net worth.

These clarifications remove ambiguity, ensure uniform application of the regulations, and present a more accurate picture of an intermediary’s financial strength.

4. Net Worth requirement for custodians

The amendment revises the minimum net worth requirement of a custodian to USD 1 million. While the existing custodians have been granted a transition period until June 30, 2026 to comply with the revised requirement.

5. Umbrella (Unified) registration for CMIs

The amendments further introduce the concept of Umbrella or Unified registration for CMIs. Entities intending to obtain multiple registrations under the CMI Regulations may opt for a single unified registration, in a manner to be specified by the IFSCA through separate guidelines.

• Amendment to IFSCA (Registration of Business) Regulations, 2021.

The IFSCA has approved an amendment to the IFSCA (Registration of Business) Regulations, 2021, relating to Lloyd’s Service Companies. The definition of a Lloyd’s Service Company has been expanded to include service companies promoted by group entities of Managing Agents or Members of Lloyd’s, subject to permission from Lloyd’s. This amendment broadens the operational scope available to Lloyd’s and its members in GIFT IFSC and is expected to strengthen the insurance and reinsurance ecosystem by facilitating the expansion of support, underwriting, and allied services within the IFSC.

Overall, the decisions taken by the Authority reaffirm IFSCA’s continued focus on regulatory clarity, ease of doing business, and strengthening GIFT-IFSC as a globally competitive financial services hub. The approved reforms are expected to facilitate growth across fund management, capital markets, GICs, and professional services, while safeguarding investor interests and supporting India’s long-term financial sector objectives.

The press release can be accessed here.

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