IFSCA has notified IFSCA (Fund Management) (Amendment) Regulations, 2026 on 27 Jan 2026. This notification makes a focused set of changes to the existing IFSCA Fund Management framework, mainly around KMP eligibility, corpus timelines, scheme operations, winding‑up, and custodians.
1. KMP eligibility – Regulation 7(5)(b)
Regulation 7(5)(b) is substituted to tighten and clarify experience requirements for Key Managerial Personnel (KMPs). The amended position is as under:
- A KMP must, in addition to the educational qualifications under clause (a), have at least 5 years’ experience in related activities in the securities market or financial products in an “eligible institution”.
- For KMPs referred in Regulation 7(2), if they hold a professional qualification, the minimum experience can be 3 years instead of 5.
- Fast‑track routes with post‑qualification experience plus certifications:
“Eligible institution” is now expressly defined to include, among others:
- Market Infrastructure Institutions, capital market intermediaries, financial sector regulators, FMEs, banks, finance companies, insurance companies and insurance intermediaries in IFSC and equivalent institutions in India or abroad.
- Consulting/advisory firms and firms of CA/CS/cost accountants in IFSC/India/foreign jurisdictions providing services to such institutions in relation to financial products.
- Any private or public company, where the experience relates to finance, accounts, secretarial or law departments.
2. Extension of time to achieve corpus – Regulation 19(3)
Regulation 19(3) proviso is replaced to provide a structured mechanism for extending the validity of the placement memorandum when minimum corpus is not achieved in time. If FME fails to achieve the minimum size of corpus, as per Reg 23(1) within the specified time period, it shall have the option to extend the validity of the placement memorandum, wherein each such extension shall be for a period of six (6) months starting from the day after the expiry of the existing validity of the placement memorandum, by filing an application at such time when the placement memorandum is still valid, accompanied by a fee equal to – i) for the first extension, 25% of the applicable fee for filing of a fresh scheme, as may be prevalent at the time of such extension; and ii) for each subsequent extension, 50% of the applicable fee for filing of a fresh scheme, as may be prevalent at the time of such extension.
3. Open‑ended schemes and USD 3 million corpus – Regulation 35
Two targeted changes are made to Regulation 35.
New proviso in Regulation 35(1): An open‑ended scheme can invest in unlisted securities only after achieving a minimum corpus of USD 3 million.
New proviso in Regulation 35(2): If an FME fails to achieve the minimum corpus of USD 3 million within the specified time, it can extend the validity of the placement memorandum on the same 6‑month rolling basis and fee grid as Regulation 19(3):
4. Additional winding‑up triggers – Regulation 131(1)
Two new clauses (c) and (d) are inserted after Regulation 131(1)(b). New grounds for winding‑up are:
- Clause (c): Where the FME has raised funds under a scheme but fails to achieve the minimum corpus during the validity or extended validity of the placement memorandum/offer document, and does not further extend such validity by making the required filing and fee payment to IFSCA.
- Clause (d): Where no investor has been onboarded, no funds have been collected, and the FME voluntarily desires to wind up the scheme.
5. Custodian appointment transition – Regulation 132 Explanation II
Explanation II to Regulation 132 is substituted to give a transition window for appointing IFSC‑based custodians. The revised position is as under:
- For schemes required to appoint a custodian in IFSC, such appointment may now be made within 24 months from the commencement date of the 2026 Amendment Regulations.
- During this 24‑month period, the FME may appoint an independent custodian in India or any foreign jurisdiction, provided that custodian is regulated by the financial sector regulator in that jurisdiction.
- The FME must also make necessary arrangements to provide required information to IFSCA whenever directed
These amendments, covering KMP qualifications, corpus extensions, open-ended scheme rules, winding-up triggers, and custodian transitions will enhance investor safeguards, boost scheme longevity and flexibility, cut operational disruptions, and align GIFT City more closely with global standards, ultimately attracting more FMEs and capital inflows.
