IFSCA notifies the IFSCA (Fund Management) (Amendment) Regulations, 2026

On January 27, 2026, the International Financial Services Centres Authority (IFSCA) notified the International Financial Services Centres Authority (Fund Management) (Amendment) Regulations, 2026 (Amendment Regulations). The Amendment Regulations, effective January 28, 2026, are broadly in line with the proposals set out in the consultation paper on amendments to the International Financial Services Centres Authority (Fund Management) Regulations, 2025 (FM Regulations) issued on October 17, 2025, and subsequently approved by the IFSCA at its 26^th meeting held on December 22, 2025 (which can be accessed here).

The amendments are aimed at rationalizing regulatory requirements, addressing practical difficulties encountered by Fund Management Entities (FMEs) based out of the Gujarat International Finance Tec-City International Financial Services Centre (GIFT City IFSC or IFSC), and furthering IFSCA’s objective of promoting ease of doing business while safeguarding investor interests.

Simultaneously with the Amendment Regulations, the IFSCA issued a circular dated January 27, 2026 (Circular), granting a one-time three-month window for venture capital schemes and restricted schemes in GIFT City IFSC to extend the validity of their placement memoranda (PPMs), from the date of issuance of the Circular under specified conditions.

Key highlights of the Amendment Regulations and the Circular are outlined below:

1. Revised eligibility criteria for Key Managerial Personnel: 

• • The Amendment Regulations retain the prevailing experience-based eligibility criteria i.e. the requirement of at least five years’ relevant experience for appointment of Key Managerial Personnel (KMPs) but significantly broaden the range of qualifying roles by permitting such experience to be obtained in an “eligible institution”, which now includes market infrastructure institutions, capital market intermediaries, financial sector regulators, FMEs, banks, finance companies, insurance companies and insurance intermediaries in IFSC, India or any foreign jurisdiction, as well as consulting and professional firms (including firms of chartered accountants, company secretaries, cost accountants and advisory firms providing services in relation to financial products) and relevant finance, accounts, legal or secretarial roles within corporates.

• • The Amendment Regulations introduce a certification-based alternative eligibility criterion with reduced work experience requirements. Individuals with two years post-qualification experience in an eligible institution in IFSC, India or any foreign jurisdiction, holding valid certification(s) as specified by the IFSCA, shall be considered eligible for appointment as Compliance Officers, while those with at least three years’ post‑qualification experience in an eligible institution and the requisite certifications as specified by the IFSCA may be appointed as Principal Officers or other KMPs.

• • For the Compliance Officer appointed under Regulation 7(2), the Amendment Regulations introduce a more flexible, qualification‑linked threshold by requiring a minimum of three years’ experience where the individual holds a recognised professional qualification, as against the earlier requirement of at least three years’ experience specifically in the compliance or risk management department of a listed company or an entity regulated by a financial sector regulator.

2. Flexibility with respect to validity of PPMs: 

• • Under the extant regulatory framework, FMEs launching a venture capital scheme or a restricted (non‑retail) scheme are permitted a one‑time six‑month extension of PPM validity if they fail to achieve the minimum corpus within 12 months from the date on which IFSCA takes the PPM on record. The Amendment Regulations replace this one-time extension with a facility allowing multiple six-month extensions of PPM validity, subject to payment of the prescribed fee to IFSCA for each such extension and submission of an extension request during the validity of the PPM.

• • For the first extension, the applicable fee shall be 25% of the fee for filing a fresh scheme (as prevalent at the time of seeking extension). For each subsequent extension, the fee shall be 50% of the fee for filing a fresh scheme.

• • The Circular offering FMEs a one-time window of three months from the date of issuance of the Circular for extension of the validity of PPMs of Venture Capital Schemes and Restricted Schemes that have expired or are expiring shortly, was issued by the IFSCA in response to representations from market participants requesting a higher degree of flexibility regarding PPM validity, as fundraising timelines are dependent on market forces.

• • The Circular provides two distinct pathways for extension under the one-time window, based on whether the scheme has commenced investment activities.

• • Venture capital schemes and restricted schemes where the PPMs have expired on or before the notification of the Amendment Regulations or are set to expire within 30 days from the notification of the Amendment Regulations, and wherein the FME has not commenced investment activities, may have the validity of the PPM extended by the IFSCA in terms of the Circular.

• • Open-ended restricted schemes that have commenced investment activities upon raising USD 1 million in funds but are unable to achieve the minimum corpus of USD 3 million within the validity or extended validity of the PPM, and where such PPMs have expired on or before the notification of the Amendment Regulations or are set to expire within 30 days from such notification, may also seek extension under the one-time window.

• • The FME must re-file the PPM of the scheme with the IFSCA within three months from the date of issuance of the Circular (i.e., by April 27, 2026), specifying its intent of seeking extension of the validity of the PPM under the one-time window, and such filing should be accompanied by a filing fee equal to 50% of the fee applicable for filing a fresh scheme.

• • FMEs that have not commenced investments and are seeking extension of the validity of PPMs within the one-time window in terms of the Circular, must not make any material changes in the PPM with respect to key aspects of the scheme, including its name, investment objective, investment strategy, structure (open-ended or close-ended), and type (venture capital scheme, category I, II or III restricted scheme). Upon receipt of the request and satisfaction of the fulfilment of the conditions in such case, the IFSCA may take the re-filed PPM on record and communicate the same to the FME. The extension of validity so granted shall be for a further period of 6 months from the date on which the IFSCA has communicated to the FME that the re-filed PPM has been taken on record.

• • Upon satisfaction of the conditions in a case where PPMs of open-ended restricted schemes that have commenced investments but failed to achieve the minimum corpus, have been re-filed, the IFSCA may take the request on record and communicate the same to the FME. The extension of validity of such PPM so granted shall be deemed to start from the date when the PPM of the scheme has expired or is set to expire. 

3. Investments by open-ended schemes: 

• • Recognising the heightened risk profile of open-ended schemes that commence investment activities before achieving the minimum corpus, open-ended restricted schemes are now prohibited from making investments in unlisted securities until they achieve the minimum corpus of USD 3 million.

• • This safeguard aims to address risks associated with premature deployment of capital in illiquid assets before adequate corpus mobilisation.

4. Additional grounds for winding-up of schemes: The Amendment Regulations introduce two additional grounds under Regulation 131 for winding up of schemes:

• • Where the FME has raised funds from investors under the scheme but fails to achieve the minimum corpus during the validity or extended validity of the PPM or offer document (as applicable), and the FME has not extended the validity thereof by making the requisite filing and payment of fee to the IFSCA.

• • Where no investors have been onboarded, no funds have been collected, and the FME voluntarily opts to wind up the scheme.

5. Transition window for custodian appointment: The Amendment Regulations have provided for a transition window for appointing IFSC‑based custodians in the manner outlined below: 

• • Under the Amendment Regulations, schemes that are required to appoint an IFSC-based custodian shall be provided with a 24-month migration window from the date of commencement of the Amendment Regulations (i.e., until January 28, 2028).

• • During this period, FMEs may appoint an independent custodian in India or any foreign jurisdiction that is regulated by the financial sector regulator in that jurisdiction and make necessary arrangements to provide such information to IFSCA whenever directed to do so.

• • This transitional provision addresses practical challenges faced by FMEs in immediately migrating to IFSC-based custodian arrangements while ensuring investor protection through continued custodian oversight.

Conclusion 

Through these amendments, IFSCA has adopted a calibrated and pragmatic approach aimed at reducing regulatory friction and enhancing operational flexibility for FMEs operating within the IFSC. The revised KMP eligibility criteria broaden the talent pool available to FMEs, the multiple PPM extension facility provides greater adaptability to market conditions, and the custodian migration window offers a realistic transition timeline.