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Listing and Fund Management under IFSCA | Decoding Corporate laws with Mehta & Mehta | YouTubeToText
YouTube Transcript: Listing and Fund Management under IFSCA
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Video Summary
Summary
Core Theme
This webinar introduces the International Financial Services Centres Authority (IFSCA) and its regulations for listing and fund management within GIFT City, highlighting opportunities for professionals and the growth of India's financial services sector.
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keep on joining and they try to skip the
introductory part. So let's start. It's 11:00.
11:00.
Good morning everyone. Welcome to the
weekly Saturday knowledge sharing
webinar organized by Ma
and today's topic is listing and fund
manager fund management under IFCA.
Uh friends this topic is uh new but
still very well discussed and is under
continuous discussion and the this topic
is evolving understanding is getting
developed among every stakeholders with
this intention today we have taken this
topic as you know as on today there are
various entity listed with IFC
some are like finance and fund
management ment area 360f capital IFC
private limited and 314 capital FME IFC
LLP as regarded debt listed SBI exemp
bank NDPC etc and others for container
corporation of India
this listing is governed by IFCA listing
regulation to 2024
it has similar kind of provision of
aerody but still with the which our
panelist will declare clarify and give
more explanation.
Interestingly, this regulation alo also
mention about spec special purpose
acquisition company which is a concept
known in US and there are provisions and
it will be interesting how it takes
shape. As regards fund management, the
same is regulated by FCA fund management
regulation 2025 which was notified on
19th February 25 and which have has
collected all fund management activity
under one regulation for ease
understanding and clarity and doing ease
of doing business. With this I'd like to
introduce our today's panelist Shri
Prahep Krishnan, executive director
IFCA. Welcome Praep. Morning.
Uh Mr. Adita Sarda, deputy general
manager, IFCA.
Welcome Mr. Adita.
>> Mr. Akas Boda, assistant manager, IFCA.
Welcome Mr. Afar Akas. Thanks for lot
your your time. Thanks.
Forly introduce our speaker
S. Prairie Brahman Krishnan
is a commerce graduate and qualified
company secretary our professional
colleague with over 27 years of
professional experience across corporate
regulatory and market domains. He began
his career with Madras Fertilizers
Limited and later served as company
secretary of Kotari Petrochemicals
Limited. He spent over two decades at
SAVI where he held key leadership roles
including heading the compliance and
monitoring division and the department
of debt and hybrid securities.
Since February 2024, he has been serving
as executive director at IFCA where he
leads the department of capital markets
and the department of metals and
commodities overseeing critical areas
such as corporate finance, market
infrastructure, sustainable finance,
investment funds and marketing.
>> Welcome Pra.
>> Thank you.
>> Our another speaker Mr. Adas Sarda is a
deputy general manager in IFCA and is
involved in activities related to policy
formulation and supervision of fund
management activities in gift IFC IFSC.
Prior to joining IFSCA Mr. Sarda was
working in savvy for decade and was
instrumental in various policy
initiatives in the areas of alternative
investment fund portfolio management
services mutual fund crowdfunding
corporate bonds etc. Prior to joining
Sammy, he worked in the corporate
strategy team of Infosys for a brief
period of 1 half 1.5 years. Mr. Sarda
holds bachelor's degree in computer
science engineering from NIT Bopal MBA
from at Delhi and LMB from Mumbai
University. Welcome Mr. Adri.
Our next panelist Mr. Akas Bodeda is an
assistant manager at IFSCA in the
department of capital markets focusing
on primary listings. Mr. Bodeda is part
of the team involved in policym in
several areas including direct listing
global access rate and init consumer
education and protection in the gift IFSC.
IFSC.
Mr. Florida is also handling the work
relating to policy and registration of
capital market intermediaries including
global access providers, credit rating
agencies, investment bankers, research
entities. Prior to joining ISSCA, Mr.
Boda gained experience in the automotive
industry working with companies like
General Motors and Mahindra Enra. Mr.
Koda holds BT degree in mechanical
engineering from IIT coart. Welcome Mr.
Thank you.
Uh I need not introduce Mr. Pala and
Sudhakar and with this I will just
request Sudhakar to we thank all for
joining us on knowledge sharing journey
on behalf of entire team of Ma and I'll
request now Sudhaka to say few words and
then Bala just one minute and then I'll
request the speaker panelist to start
the order can I think Mr. will be the
first and uh for a change friends today
we have no presentation it's our
panelists who are only presenting
there's a change thanks a lot over to Sudhakar
Sudhakar
>> thank you very much and good morning to
everyone good morning Praep in fact we
are really deeply honored to have you
along with your team here on our
platform in fact I as you know that we
both were working very hard to have this
particular day somehow it was not
materializing all through but today it
vitalizer. In fact friends that uh apart
from whatever Deep has introduced in
Praep if I say that because uh in the
SSB board I working on other boards of
ICSI also I'm working with Praep for the
last 10 plus years I found him he's a
very practical and pragmatic regulator
when he was in CB also I found that and
when he is in IFSCA also the same thing
he's actually carrying forward and
because the idea of the industry is very
much required which Praep has spent
about 3 four years in the industry
that's why he know the exactly
what whenever you bring a regulation he
while bringing the regulation itself he
has to put himself in the shoes of the
person who is going to implement that
and has to understand the difficulties
and remove that in the inception stage
itself is the mindset with which Praep
always works and that's why and apart
from that he also is he got a lot of
affinity towards our profession and
getting lot of recognitions to our
profession from wherever he is able to
do that while he was in SEI also when he
is IFSCA also and I don't know one thing
whether you have noticed it or not Praep
is having 27 years of experience and
Adita is having 15 plus years of
experience and Akash it was not
mentioned I'm sure that he too must be
having 10 plus years if not more but see
that all are looking so young actually I
was actually thinking that you know
Akash and Adita especially they are
looking so young. I thought they might
be having five plus years of experience
but I'm surprised to know that they're
so young but already they have under
their belly about one and a half decades
of experience in as a regulator you know
I'm sure that Praep is having a very
young and dynamic team with him and I
requested Praep that to explain to all
the participants about what isa
in the right from the scratch and from
the fundamentals onwards because we have
some sketchy knowledge about this I'm
sure that every none of us are having
some kind of an in-depth knowledge about
the subject. We know that lot of
exemptions are there under the company's
act and other statutes are concerned. So
let us understand from the horse's mouth
today what exactly is IFSA and how what
company secretaries can get benefit out
of this whether in service or in
practice all the things are going to get
unfolded to us by Praep and his team
today. I give a pass here and Bala you
may say a few words and after that will
take over. Thank you.
>> Good morning to all of you. I am truly
honored to have such a a gathering today
expert of the people since these are all
going to be there as Sudagar said it is
really a new topic. I'm also trying to
learn it but only thing is as sudagar
puts it actually our institute has been
doing extremely extremely very good uh
job on this. In fact ours brought out
the book actually. This is the book
which is actually there IFCA which they
actually brought out the book actually
here. And this book actually talks about
IFCA and it gives you the very clear
picture about this. This is book has
been brought somewhere in the year 2023
which Sudagar talks about. It talks
about the various exception etc. It has
been actually listed down that is punt
thing. And second thing is I was just
going through the publication of the
institute. Institute is actually going
to introduce a very new course related
to the gift city from the year 2026.
That is really really a good news to all
of us. In fact this course what is
proposed by the institute is going to be
focusing on the finance and the fund
management services of the gift and IFC
and aiming to make the company
secretaries actually future ready for
the aligned with the global financial
services. That is one thing as I
understand currently more than 200
company secretaries are already working
on the financial and fund management
uh companies in the GI city itself
actually and definitely this course is
going to be specialized course which
help the people who want to learn this
course especially in the international
finance laws taxation and the fund
management and it will definitely
definitely increase not only in the
employment but also in the practice to
render the services to the industry that
is what it is happening that's what I
think so so with this I give a pause
here I'm looking forward to hear more on
IFC although I have a theoretical
knowledge by going through the book I'll
be able to hear from you people to know
the intricacy of this no thanks a lot
over to you sir pra
>> uh thank you uh thanks a lot for a very
glowing introduction all of you and a
lot of this actually is uh you know from
the team that I actually have so I
should actually uh you know uh say that
so I'll first start with my presentation
uh uh yeah I hope it's visible huh
>> yeah okay so uh let me just go back in
history because why did we start the
IFSC and uh you know so that people will
get to know the background behind this
whole you know this place so uh we all
know that India
got independence in 1947 and the real
independence as far as economy actually
happened in 1991 when we actually when
we liberalized in fact we were forced to
liberalize because the IMF actually said
that unless you carry out certain
measures uh then we will not be able to
give you any more loan to you. So that
is actually it was become it became a more
more
uh you know instead of calling it as a
visionary uh reform. It is actually
something which was a for something by
force that we had to sort of do it. But
the benefits of liberalization,
privatization, globalization did not
trickle uh until perhaps probably you
know until probably a decade later
because slowly we had international
people coming in rules were getting
relaxed you know change changed and all
that. So the benefits of liberalization
started trickling in probably from the
late '9s and early 90s. So around this
time u you know the present prime
minister of the country was a chief
minister of the Gujarat state. Then he
had visited Singapore and he had found
that a lot of Indians were doing
business in Singapore and he asked them
as to why he you are doing business in
Singapore instead of India and they said
that there are a few things. One is of
course we cannot do business in dollars
which is the global currency which is
being used as currency for world
business. Secondly the rules and
regulations are too tight and perhaps
there's a lot more red tape which is
involved. So which makes us uh you know
stay away from India as a business
center. So uh he came back and he said
thought that okay let us do something
about it. Around the same time probably
around 2006 2007 the ministry of finance
brought out a consultation paper a small
paper in fact or rather a report on
making Mumbai as an international
finance center in fact Mumbai as a
regional finance center. The report that
was given by the group was Mumbai as an
international finance center and it
suggested certain things which actually
have been embedded into the gift city as
of now.
So as this is uh how things happen in
India, it took time for the next five
years nothing happened until Mr. Modi
himself laid the foundation stone for uh
the gift Gujarat international fintech
city which is the uh the acronym I mean
gift actually stands for Gujarat
international fintech city and this
happened in 2012 but of course you can't
have a city unless you are going to you
know have international business so for
first few years business was carried out
in what you call as the domestic tariff
area and some incentives were given by
the Gujarat government for IT I it
techfin entities to start business there
including probably reimbursement of pro
private fund paid and some local taxes.
So after the new government came into
power in 2014 a lot of things started
chugging in motion and the the
regulators of India of the financial
sector in India namely uh RBI, SEBI,
IRD, PFR they were asked to uh you know
look at the IFSC and bring out rules.
Now it becomes quite difficult to have
four regulators coordinate and bring out
rules for one jurisdiction. So while
they were trying to do that for a period
of almost 3 to four years in 2020 it was
thought fit that probably it's uh
becoming difficult. there's a need for a
regulator who can also not only think
you know from the perspective of an
international jurisdiction but also you
know is able to handle all these
verticals together in one shot without
every time going to the domestic
regulators. So the IFSCA which is the
international financial services centers
authority uh was formed in 2020 October.
We just completed 5 years of existence
as a regulator. Now uh one thing I
should clarify now while this is the
first international financial service
center which is actually a special
economic zone only for BFSI services
only for financial services only for
financial products and only for
financial institutions. Now there can be
other IFSC's also in the country which
is why in our uh know the regulator
itself carries the word centers and it's
not center. So tomorrow if the
government decides to established more
centers they can be there in the country
but they will still come under the
purview of the IFSC. Now with this what
we have done over a period of time now
what exactly is the IFSC? The IFSC is a
small parcel of rand around 300 acres
which is uh next to the domestic tariff
area. the total size of the domestic
tariff area and the IFSC itself is
around 800 you know um uh 800 800 acres.
So this small thing is only uh you know
300 acres and and uh in this there are
almost 40 50 buildings that are coming
up as we speak. Almost 10 to 12 bank
buildings are already functional and
there are almost a,000 entities which I
will show you as we go ahead. Now this
international financial service center
actually carries on only international
business. There is no local business.
There is also an exemption for 10 years
from the business income. In case you
start a business here, then the business
income is exempt up to 10 years. There
is no GST. There are certain other
exemptions when it comes to transactions
in the IFSC for companies Indian and
international. The first rule is there
should be no India business that should
be carried out here. You can apart from
the currency and you should you can
either carry out international business
or business in the IFSC. Now uh as far
as uh the
you know as far as this um international
financial service center is concerned
over a period of the uh you know past 5
years the IFSCA has brought out almost
40 regulations covering various various
verticals. Business happens with almost
60 to 70 countries. uh you know inbound
money is actually coming from 60 to 70
countries and money goes out for to 20
to 30 countries which actually is you
know which it sort of um is is exemplary
of the fact that we have been able to
sort of reach uh you know do the re you
know reach international centers
actually as to how it was originally uh
you know sort of intended. Now allow me
to get into uh you know and and of
course there are professionals here like
it was emphasized by the earlier
speakers you have charted accountants
company secretaries cost accountants
MBAs a lot of people who are here almost
people 6,000 people are gainfully
directly employed here and 20 odd
thousand people are indirectly 20 plus
thousand people are indirectly employed
as gift is concerned and this number is
only bourgeoaning by the day it just
keeps increasing
now let me get down to uh you know
you know each of the verticals which are
there. Now if you see this chart it
shows you which are all the different
entities which are types of entities
that are available. You have banks you
have almost you know 40 odd banks
finance companies foreign universities
interestingly we have foreign foreign
universities also here which I will
cover as we go ahead and we have stock
exchanges clearing operations a bullying
exchange you know and insurance
reinsurance all the things that you
would like to know. Now if you see this
gives you in numbers because always you
need numbers. Statistics always while
people may say that there are three
types of lies that is lies, white lies
and statistics. But statistics are also
needed when you come to there is because
they are the only metric that you have
if you want to sort of measure one
jurisdiction against another. So you
have almost 35 banks here, 18 Indian
banks, 17 foreign banks. We have global
administrative offices, stock exchanges.
I told you the entire capital market
ecosystem is here. Everything is
separate and only for this jurisdiction.
They have got no ties with the domestic
jurisdiction as far as transactions are
concerned. You have as the fund
management ecosystem is possibly the
most vibrant and successful ecosystem
here with almost 300 funds and 200
management foreign fund management
entities. There are insurance. So which
we are aiming to be a hub for
reinsurance and uh there are indirect
and direct and indirect business that
actually happens here as far as the
insurance sector is concerned. There are
very niche institutions also which I'll
explain as we go ahead and a few
emerging businesses. Okay. Now uh if you
look at the banking sector there are 35
banks as I told you 18 Indian and 17
foreign banks. Now what type of work
happens now? We have got banks as you
see from Japan, US, Singapore, UK,
France and a lot of things actually are
increasing know even Australia every
time we go for a foreign visit we come
back with a couple of mandates
particularly from banks. So uh I mean
this is something which uh is is quite
has a sort of epitomized system or uh
our trips. Now we have we are the only
international regulator to mandate 5%
dispersals of loans. 5% of the lending
should go for renewable energy products
projects and uh now we have it's become
a hub for NRA deposits almost 11,000
accounts have been opened so far
external commercial borrowings now
India's most preferred place for
external commercial borrowings is the
FSC and uh there are also international
and for borrowing here uh the
withholding tax is nil as far as through
loans if you're doing it through bond
it's only 9% as opposed to 20% 15 to 20%
in other jurisdictions
Now there are also many PL entities
which are going to make this place as
their hub for global treasury you know
treasury treasury centers. Now uh if you
can actually see the growth the growth
is actually like a hockey stick. If you
see from uh you know 28 billion it has
reached almost 100 billion as far as the
banking asset size are concerned and as
you can also see the ECB and trade
finance has also been uh sort of uh
going up. Now we come to capital
markets. The capital markets is the
other vertical. Now each of these
verticals is headed by an executive
director and there are you know general
managers and there are stops. Our
vertical is the fattest vertical
predictably we have got almost 20 plus
people and the capital markets vertical
actually you know lords over the stock
exchange uh operations clearing
operation operations. There is one
exclusive depository also here the India
international depository limited. Now
presently while equity is just about to
be listed, bonds have already been
listed almost uh 60 70 billion worth of
bonds have been listed by almost 160 170
issuers. Now with the international uh
you know the rates not being so
favorable, interest rates not being so
favorable. So the possibility of you
know the bond issues being a lot more is
is subdued for the time being. Probably
it'll increase as we go ahead. Now
direct listing of Indian stocks is going
to happen. This is by unlisted Indian
companies. Listing by listed Indian
companies. We are still in talks with
SEI. We are in SEBI. We are in the final
stages of uh you know you know drafting
material with SEI rules and regulations
with them. Now uh and presently the NX
the Nifty futures which is traded from
Singapore directly gets traded on the
nifty with almost recently there was a
record in October 106 million actually
106 billion is the amount that has been
actually traded and which is which is
quite a significant amount 106 million
per month it's a monthly thing and it
actually hit a high this October uh and
the first DRHP for equity has been filed
equity again it's again in foreign
dollar foreign currency Indian company
can take money only from international
participants as investors, NAS and
others. Foreign companies in case they
come with a public issue. Indians can
also invest in these companies because
the limit liberalized remittance scheme
of the RBA allows every Indian to invest
up to 250,000 internationally. Of
course, they should not invest in
derivatives. So, it is large like
largely like your equity and bonds and
all those things which you can sort of
invest. Now the uh so this is the growth
uh if you see the as far as the turnover
is concerned now again it has gone hit a
peak it was 92 there now October it has
hit 106 it's an all-time record as far
as this place is concerned the bond
markets as far actually are going up if
you see and now they almost reached $75
billion interestingly as far as uh we
have a very interesting thing as far as
the bonds are concerned because uh as
far as green bonds social bonds
sustainable bonds are concerned uh we
are we actually have a head start. We
have almost uh you know $15 billion
which has been raised out of this
jurisdiction. We allow all international
taxonomies. We have not invented a
taxonomy of our own. So uh you know that
is something which I also want to uh you
know tell the audience here. The fund
management as I told you is of course
Rahhaty has got a very deep he's going
to have a deep dive on this uh deep dive
on this fund management subject but we
have got globally aligned fund
management regulations very recently in
2025 there we have almost 4,000 odd
foreign investors and I'm very happy to
tell you that the retail mutual funds
actually have taken off now with Indians
investing in outbound funds and and also
um what do you All international NAS are
also investing in funds through the
IFSC. So mutual funds actually have
taken off because it's the only place
where 100% NRA investment in funds in in
one fund actually is is permitted which
is significantly increased the
participation and also interest from
NAS. I should also tell you that for
Indians who want to invest in foreign
stocks. So the only way you can do it is
only through brokers in the IFSC. Sebi
has also mentioned that you cannot do it
from India. So in case anyone is doing
it from India, please tell them because
we are expecting a circular fund sebi
very shortly. All the brokers who are
there who are carrying out international
business should carry the same only
through IFSC. Now we have brought in a
model called global access model. It's
become a runaway hit. Almost 35 brokers
are just getting ready to get registered
only after this. Did they give you uh uh
access to international markets in you
know Brazil, US, you know Europe,
Australia etc. So you can invest in any
part of the world through your brokers
and there are certain investor
protection measures also which have been
brought by the uh IFSCA through the
global access model. Uh so this actually
is a small hockey stick uh diagram. Once
again if you see it's just again going up.
up.
In case of insurance sector we uh you
know the uh we have first of all made
regulations very easy. Instead of having
uh the different multiple regulations
which are there in India they have been
consolidated into 13 regulations in the
IFSCA. Now we call them as IIOs, IFSA
insurance offices which provide you know
life, non-life, health and reinsurance
uh uh you know products but reinsurance
is the biggest uh product here and we
aim to be a reinsurance hub and there is
also uh a retail business which is
actually gaining uh momentum in this
place. We are also looking at
introducing different types of insurance
products like cat bonds etc which which
are still under consideration. And uh
one thing as I told you there are
certain indust interesting businesses
which are uh which happen here in case
of financial companies there are certain
things like uh aircraft leasing and
finance and and ship leasing and what is
so unique about them. So if you look at
you know aircraft leasing India is one
is possibly the largest buyer of
aircrafts in the world on leaser of
aircrafts in the world because of the
rising passenger traffic uh through uh
through Indian airlines. Now but Indian
companies, airline companies actually go
to Dublin and Singapore to lease out
aircraft. So why should we do that? So
that is the idea behind setting up an
aircraft leasing business here. Now
almost 271 aircrafts and engines and and
you know equipment actually has been
leased out of this place and these
things actually are are increasing. So
hopefully we should be able to bring a
lot of businesses. As I told you these
has been set up with a three-fold
objective. One is onshoring to offshore
bringing business from international uh
business international jurisdictions.
Secondly to be a hub for finance global
capital finance and any type of finance.
The third one is to be a hub for innovation.
innovation.
Okay. So the this is the shipping thing
which as I told you. So uh we are one of
the we use a lot of shipping trade but
less than 1% of the global fleet is
owned fleet is owned by India. So it is
important that we need to do that. The
government is actually setting up a
marine development fund of almost 70,000
cr. Recently the it just last a couple
of weeks ago I think the prime minister
inaugurated the maritime uh proposal and
IFC is actually going to play a big part
as far as this place is concerned. So
almost 28 ships have been leased
internationally. It is the helenic uh
fleet which holds the
uh you know record uh which is in
Greece. They hold the largest number of
slip ships. They lease the largest
number of ships. So we are trying to
once again bring those things here. So
essentially business for India should be
carried out from India is the idea and
for that the IFSC is there to sort of
give them benefits to give them uh uh to
to to to give them benefits uh to also
create an ecosystem where doing business
is easy. Okay. Now it is important that
any international financial center also
has talent. So while we already have IT,
IM other universities, law universities
etc. nearby and also we pick up people
from all over the country all over the
country. Now many Indians also want to
do foreign courses. Now foreign
universities carry courses which are
very niche where there is no
interference as far as the syllabus is
concerned from the AICT or the UGC. Now
these universities are setting up have
been setting up campuses. Four campuses
have been set up. The next one is also
setting up. In fact, the Queen Century
University in Belfast has set up a
separate building where only you know
courses are being offered. If you see so
many courses are offered, you'll be
surprised to know that the cost of this
is only half or less than half of what
Indians pay abroad. And you get the same
degree, the same international degree
which you get while going there. You can
save on cost of you know staying there
which are which is very expensive. you
can be home have home-cooked food and
also get the international degree at
just half the cost. So there are very
niche subjects on which these the
courses are offered. In fact if you ask
me this is going to be one of the
biggest things of this IFSC.
You know there are campuses which have
been opened and over the next 3 years I
see a lot more international
universities coming here and setting up
shop. Now here not just Indians but also
the global south Africans as well as
other people from the global south can
come and you know uh you know you know
you know study here. So this is one big
advantage of doing this. There is no
interference the entire money can be
repatriated internationally fully fully
fully repatriable no interference in the
curriculum or or or subjects. So uh in a
nutshell this is the scorecard almost a
thousand plus registrations have been
granted every in fact just to take funds
every month we approve almost 10 to 15
funds right so that way there are so
many registrations that are happening
monthly turnover you know it's almost 90
odd billion on an average but this year
this month as I told you we hit almost
hundred billion $106 billion the banking
sizes actually hit $und00 billion 200
fund management entities are here 200
300 fund management entities are here
now cumulative debt listing is almost 70
odd billion and uh you know banking
transactions are have also increased. So
so so we actually only have good good
numbers to show and over a period of
time probably within a year or two this
is only grow exp to only to going to
grow only exponentially. Now if you're
going are going to ask me what does a
company secretary have to do with all
this right that is the question. Now
every single slide that I told as I
showed you has a company secretary there
right? Every single slide that I showed
you needs men, needs qualified
personnel, needs, you know,
principal officers, compliance officers,
key managerial personnel who are able to
study these regulations, get into you
know what, understand these regulations
and also uh you know are able to
practice like for example we have there
are certifications that we have made
which we have brought for practicing
company secretaries, practicing chart
accountants and cost accountants for our
quarterly reports where then you have
one option. You can also operate as
full-time employees as principal
officers or compliance officers in any
of these entities particularly in the
capital markets. Uh we have almost every
regulation mandates that you need to
have a you know PO or a CO. So as I told
you five 6,000 people are already
working here. There is a uh and and
there are and just imagine you get to
work on international law right you can
you can learn and learn laws which are
done international you handle
international business so your wings are
actually going to you know expand in
this age of AI in particular
what happens is that uh the work that we
do get is keep it keeps evolving. You
are not going to sit with the company
secretary to draft a resolution. The AA
actually throws out a resolution once
you give out the parameters. Right? So
you don't need a company secretary for
those things. What is the company
secretary going to do? The person is
only going to add value in decision
making and other things. And for that
international experience is a must and
that is what the IFSCA affords you. So
I'll be around of course we'll uh we
have two more presentations uh in going
to a deep dive. one by our Akash who is
a very very good officer who has been at
you know at Mahindra earlier he has
brought in experience from the industry
he's going to give you a lowdown on the
listing ecosystem here which will be
very interesting and then Aditya another
bright uh person with whom we have
worked in Sebi also earlier so Aditya
will be giving you a lot on goten
immense knowledge on funds and he's also
heading our rate init
reforms in the IFAC. So he will be
giving you a presentation on fund
management. So uh it's fine. Thank you
so much for listening for a patient
hearing. Now we will uh you know go to
Akash for the next presentation. Either
we uh I don't know whether you want to
give up questions now or you want to go
for questions later.
>> See only one this thing you know it's
not a question actually.
See for as a company secretaries though
you have mentioned that there is a lot
of scope is there to venture into the
IFSA as well as into the the gift city
but what especially what sort of skill
sets they have to develop which
regulations they have to look into and
if you can develop on a bit more into uh
for about 2 three minutes more it will
be helpful to the company secretary.
>> Yeah. Yeah. So two of the regulations
which are important for company
secretaries are being explained in the
next two presentations. One is the IPS
if fund management regulations. One is
IPS if listing regulations. Now then for
company secretaries we also have the
IFSCA capital market intermediaries
regulations. So we have brokers. So
brokers need compliance officer. So you
need to read the regulations. So for you
it will be a you'll have facets of the
regulations which are there at SEBI but
which are very different quite different
and contoured for an international
jurisdiction. So I would request them to
look into the subject first of all
decide the vertical where they want to
go. Some people want may want to get
into banking. Uh you know some some
people may want to get into capital
markets. But I believe a lot of people
would actually like to get into capital
markets. If you want to get into capital
markets, then you have of course the
listing regulations, IFSKA listing
regulations, IFSKA fund management
regulations and IFSKA capital market
intermediaries regulations and the IFSKA
MII regulations which is a market
infrastructure institution regulations.
These regulations are quite important.
We also have a boolean boolean regul
bullion exchange and boolean also
requires a lot of legal personnel. So
there also you can read about the IPSA
boolean regulations. So if you ask me
these are four to five important
regulations which company secretary
should read for this place.
>> Yeah Pra there is one question by Mr. >> Yeah.
>> Yeah.
>> Yeah I can read that. It says can you
please throw some light on the platform
play regulation in terms of the number
of entities registered for this same etc.
etc.
>> Yeah. Yeah. See of course Aditya will be
giving you a lowown on platform play.
Platform play essentially is a
is is is a way in which third party
funds are managed by an existing fund
management entity in the IFSC. Presently
there are three entities which have
already registered for platform play.
Two have already been given the licenses
and they have commenced operations. The
third one the application is just under
final clearance. So once that is done
and they will start operations and we
are getting we while we are also
revising certain things on the platform
play which we will believe it's also
going to boost the ecosystem because we
have come out with the consultation
paper. So we are getting a lot of
traction and interest from the uh from
the fund management entities.
>> There's one more question actually has
come up. what opportunities are
available in the IFCA for the cost
accountants and how the CMA will be able
to play for the growth economy of our
country throughout. Whatever I have said
for company secretaries applies to both
cost accountants and uh and uh chartered
accountants. But in case of cost
accountants and chartered accountants
since they are also into accounting we
have brought in something called the
BATF regulations booking bookkeeping
accounting taxation and financial crime.
So that allows you to do international
accounting business in India uh in the
IFSC. In fact, yesterday as I was also
uh you know standing in for my
administrator while approving the SEC uh
applications, there were two
applications under the BATF from one
from a cost accountant firm and one from
a charted accountant firm. So they would
like to do international business. So
this is also available for them. Now in
case a practicing company secretary
wants to start business here, we have
something called the TAS regulations,
techfin and ancillary services
regulations where they can set up a
firm. a practicing ammon can set up a
>> I think that's the question. Thank you.
Thank you brother. >> Yeah.
>> Yeah.
>> Uh so first of all uh thank you uh to
the office bearsers of Mahhata and Ma
for inviting me to this webinar and
thank you to Praeps for giving me this
opportunity. So like Praepsa mentioned
one of the critical reasons behind
establishment of IFSC and IFSCA is uh
onshoring the offshore which essentially
means to bring all India focused
businesses which used to take place
outside of Indian jurisdiction and to
bring them within Indian borders and to
uh facilitate this objective the IFSC
and IFSA have been created by the government.
government.
Fund management happens to be one of
those uh you know examples where prior
to establishment of IFSC a lot of
foreign funds which were otherwise
intended for investments into India but
they were pulled into other
jurisdictions. Uh some classical
examples being Singapore, Mauritius, uh
Luxembburg etc. So the fund man funds
used to be pulled in other jurisdictions
while the ultimate investments were made
in India. And because of this activity
of pooling being done outside of India,
the benefit of uh you know uh employment
generation or uh uh the income tax that
gets generated by the management fee and
otherwise overall overall development of
the fund management ecosystem was not
being percolated into the Indian economy
and it was actually reaped the benefit
was reaped by some other jurisdiction.
Therefore, uh the fund management
regulations when uh created by IFSCA,
one of the areas which which where we
wanted uh uh to bring this change was to
provide the fund managers the same level
of regulatory flexibility, the same
level of ease of doing business which
they are otherwise used to enjoying in
the foreign jurisdictions. so that they
can you know get a nudge they they get a
good uh reason for shifting their
operations from foreign jurisdictions
and come to IFSC and uh in subsequent
slides we will see that uh the changes
brought in by IFSC have actually
resulted into many of the funds being
relocated from the other jurisdictions
to IFSC and at the same time the new
funds the new India focused funds which
are being set up predominantly are now
being set up in IFSC jurisdiction
>> school hygiene and tropical medicine has
released research which says that nearly
600 each related.
>> So uh before we get into the
technicalities about the fund management
regulations uh considering that most of
the participants in this webinar are
more familiar with the nomomenclature
and the regulatory framework in the
domestic market which is governed by CB.
I'll start with that as the benchmark
and then probably
uh comparing those benchmarks or those
uh uh you know those nomenclature with
the nomomenclature that is available in
the IFSC we would be more better able to
make sense of the IFSC regulatory
ecosystem. So if we talk about the fund
management investment products or fund
management related services which are
available in the domestic market, the
typical examples u you are already most
likely be aware of are mutual funds,
ETFs, alternative investment funds or
EIFs, portfolio management services,
REITs and invits.
Some of these some of these uh products
are more intended towards retail
investors. For example, mutual funds,
ETFs, uh REITs and uh in which are more
uh uh uh you know oriented to be uh um
marketed to to the retail investors
because generally the ticket size or the
minimum investment size is on the lower
side or generally there's no restriction
on the minimum investment side. On the
other hand, Aifs and PMS are generally
intended for those investors who
typically invest a larger chunk. For
example, in the Aif, the minimum
investment amount uh set by CB is uh uh
rupes 1 cr and for the portfolio
management services, it is 50 lakh
rupees. So this broadly represents the
overall fund management uh uh bouquet
which is available in the domestic
market. Now when we compare all these
products with the products similar
products available in IFSC you will see
uh corresponding to mutual funds we have
retail schemes which are broadly the
same uh the regulations are broadly on
the same lines except for the fact that
the retail schemes uh under IFSC have
more flexibility in terms of uh you know
the investment opportunities the
investment universe uh the type of
portfolio that can be constructed by the
fund manager. ETFs are also present
uniformly on the both sides.
uh similar to the Aifs in the domestic
side, you will see that we have
restricted schemes and venture capital
schemes which are broadly modeled on the
same lines and AIFS but similar to
retail schemes the concept or the
principle of bringing in more
operational flexibility has been
extended in restricted schemes also.
Just for an example you will find that
under EF regulations CB has mandated
certain portfolio diversification norms.
SB has also restricted the usage of
leverage. So while these are safeguards
which se has uh put in place for the the
domestic u investment vehicles
considering that in IFSC the the
clientele or the investor base is uh
more sophisticated or more informed in
comparison to the domestic jurisdiction
these uh restrictions have not been put
in place by the IFSC for the restricted
schemes and the venture capital schemes.
Portfolio management services also
happens to be same on the both sides and
similar to REITs and invits and IFS in
in the dome domestic jurisdiction. IFSC
also has the concept of investment
trusts which includes both REITs as well
as invits and again the operational
flexibility given to the fund managers
under the investment trusts in IFSC is
much more than that is there in the
domestic side.
Now for those who have ever dealt with
uh CB regulations or are aware of CB
regulations and I I assume that a lot of
you would have that experience you will
know that for each of these investment
products CB has a separate set of
regulations. So for example for mutual
funds there's a CB mutual fund
regulations uh ETFs also happens to be a
part of the mutual fund regulations for
AIFS there's a CBF regulations 2012 PMS
there's a uh CBPMS regulations 2020 so
on and so forth what this basically
creates uh this basically leads is that
for a fund manager who wants to do uh
more than one activities more than one
of these activities in the domestic
market they are required to go to CB and
seek separate authorizations separate
approval for each of these products. And
while uh uh this sort of regulatory
framework has been created by SEB
because the jurisdiction is quite old
and uh as and when the investment
products came uh you know uh uh uh uh
came into came at four SEB created a new
regulation to govern that activity. But
considering that IFSC has the benefit of
u you know looking at the experience uh
that the domestic market has had and at
the same time uh looking at the
practices which are uh prevalent in the
international markets uh what we
intended to do was to enable all these
different activities all the different
fund management related activities under
a single registration and that is where
the IFSA fund management regulations
came uh were uh were notified in 2022.
So the journey of IFSC fund management
regulations started in 2022 and like
Praepsa mentioned these regulations have
been uh comprehensively overhauled and
renotified in 2025. So with IFSA fund
management regulations 2022 as well as
in 2025 these are basically uh a single
piece of regulation which governs all
these fund management activities be it
mutual funds AIFS leads init or PMS. In
addition to these activities, the fund
management regulations also include
within their scope uh family investment
funds, special situation funds uh uh and
and uh uh the third party fund
management services which is a recent addition.
Now, so I mentioned that for doing any
fund management activity in IFSC,
the fund manager basically needs to take
a single registration
considering that the the registration
allows the fund managers to do multiple
activities and uh different fund
managers would have different plans. So
some fund manager would be interested in
prov uh in providing the entire suit of
uh investment products starting from
retail schemes to the uh AFS or
restricted schemes. Some fund managers
may only be willing to deal only with
accredited investors or investors with
or H&I sort of investors. There could be
some uh fund managers who only want to
you know facilitate investments in uh
startups or uh or they they may want to
be active only on the venture capital
side. So considering that different fund
managers would have different needs or
different plans for their businesses in
IFSC the regression provides for three
different categories of registration.
Starting from the most broad category of
registration which is registered FME
retail. This category of registration
allows the fund management entity to
provide and offer the entire suit of
fund management products starting from
uh the retail schemes wherein they are
allowed to deal with retail investors.
There is no uh restriction in terms of
the minimum investment amount to the
more complicated products where there uh
uh uh which includes venture capital
schemes or the restricted schemes where
there is no restriction regulatory
restriction on the leverage where there
are no norms for portfolio
diversification because it is understood
that these investors who are investing
in these uh complex schemes are more
aware about their u about their
investment risks and therefore the
regulator does not need to be more
prescriptive in uh in these products. So
registered FME retail is that category
of registration which allows the FME to
provide all the all the services all the
uh activities permitted under the
regulations. Then the second category
the midcategory is the registered FME
non-retail like the name suggests these
FMEs are not allowed to deal with those
investment products where there's
participation from retail side of
investors. So uh so non- retail products
uh they are very well permitted which
includes venture capital schemes, angel
schemes, restricted schemes, portfolio
management services and those uh reads
and init there's only private placement
and no public offer is allowed. The
lowest and or the narrowest of all
categories of registration is the
authorized FME. Uh these fund managers
are only allowed to offer venture
capital schemes or angel schemes. These
schemes are primarily intended only to
make investments in startups or uh you
know new age companies uh companies
which are typically less than 10 years
old and uh and this is uh where the
entire scope of their operations gets
confined. Now with these three
categories of registration considering
the scope of the difference in the scope
of their activities there is also the
difference in their eligibility criteria.
criteria.
Of course, for an FME, FME stands for
fund management entity. Uh for a for a
FME which is allowed to deal with retail
investors, the regulators perception of
risk for that FME would be higher
because if a fund manager is dealing
with hundreds and thousands of investors
who also happen to be retail uh
investors who are contributing in small
amounts. Therefore the perception of
risk by the regulator is on the higher
side and therefore the eligibility
criteria for such fund management entity
would also be higher. The same principle
that the fund uh the registered FME
non-retail would have lower eligibility
criteria lower ongoing compliances as
compared to the registered FME retail
and the authorized FME which has the
narrowest scope of operation would have
the lowest of all eligibility criteria
and the ongoing compliances. So just to
spend a minute on uh sorry just to spend
a minute on what are these criteria
eligibility criteria I'll touch upon the
major ones the legal structure is
primarily uh same for all except that
the retail FME uh cannot be in the form
of a LLP or a branch of an LLP
net worth which is a key determinant of
substance as well as uh uh uh you know
as well as an important eligibility
criteria. You will see that for the
authorized FME the net worth is at the
lowest level which is $75,000. For
non-retail it is $500,000 and for retail
uh like I explained considering the
higher sense of uh you know risk
perception involved with their
operations the net worth is kept at $1
million. The minimum manpower which is
which the regulation prescribes and this
is only minimum. The overall expectation
of the IFSA is that the manpower is
commensurate to the size of operations
or the complexity of operations but uh
uh the minimum that is anyways required
to be ensured at all points of time is
one for the authorized FME for uh it is
two for registered FME non- retail and
for registered FME retail it is uh uh
minimum three uh employees three KMPs
and then there is also a uh AUM linked
KMP requirement that as and when the AUM
of an FME crosses $1 billion, they are
required to bring additional 1kmp for
every $1 billion of additional uh uh AUM
under them. And uh uh just to explain
that requirement slightly more in
detail, this AUM does not include the
AUM uh from the fund of fund schemes
that they are managing in the IFSC. So
we uh it is understood that the fund of
fund schemes typically have uh lower
scope of operations because the ultimate
uh investment is already predetermined
that the money is going to be invested
only in one or two uh funds which are
already identified and probably
disclosed also in their fund documents.
Therefore the AUM of the fund of funds
is not considered towards the
calculation of the $1 billion. The
experience and track record requirement
for different categories of FMMES are
like this that authorized and non-
retail considering that they are only
dealing with non- retail investors
accredited or sophisticated investors.
What we expect is that the FME has
people or manpower who have relevant
experience in those areas.
As far as uh FME registered FME retail
is concerned considering that there is a
participation by retail investors they
are required to have slightly longer
track record of having dealt with large
AUM or and or large number of investors
so that either the FME or its holding
company or you know the associates of
the FME have at least 5 years of
experience of managing $200 million in
AUM and 25,000 investors
or alter Alternatively, there should be
a person or persons in control of that
FME who has uh uh similar sort of
experience of 5 years in uh managing at
least 1,000 investors for at least 50
million worth of uh assets. Uh and for
for uh an FME which is able to meet the
second criteria, the second track record
criteria, the requirement for net worth
is higher and as opposed to 1 million
which is otherwise required for a
registered FME retail. uh for such FMEs
the requirement is on the higher side
and it is $2 million. The otherwise
criteria which are typically seen in
almost all the regulations by all the
regulators which is fit and proper uh
requirement for the KMPs for the entity
for the directors shareholders etc. It
is there in the IFSC fund management
regulations also then like I mentioned
the in uh similar to the requirement of
manpower infrastructure also requires to
be commensurate to the size of operations.
operations.
Now these are the broad eligibility
criteria of the different categories of
fund management entities. We looked upon
the difference.
>> There are two questions have been
actually asked here. Is there any limit
of investment on retail schemes? That is
the question number one. Second question
is any specific reason why LLB is not
actually permitted in the legal form in
case of the retail that's the next question.
question.
>> Okay. So uh for the first question in
case of retail schemes the regulation
does not prescribe any minimum
investment requirement. However, what we
have seen is that uh there are four uh
detail schemes which have already been
approved by FSCA. What we have seen is
that in some cases uh the fund managers
have chosen to impose certain uh minimum
investment requirement considering
their own uh assessment of viability of
business, their own requirement of uh
meeting the minimum uh uh uh you know
unit economics. So that is where the
fund manager discussion comes into
action. But as far as regulations are
concerned for retail schemes there are
no minimum investment requirements.
Having said that what we have done is
within the retail schemes we have
created a separate class of uh uh uh
such retail schemes where there the
minimum investment requirement is kept
at $10,000. For those type of retail
schemes, what we have done is we have
allowed higher flexibility of operation
to the fund manager there because these
investors are coming uh you know uh with
a with a higher uh uh at a higher
benchmark. Therefore, it is understood
that these investors would be better
aware of their rights. They would be
better aware of the investment risk that
their uh fund manager is taking.
Therefore for such uh schemes we have uh
you know exempted from the requirement
of listing on the stock exchanges. These
schemes have been permitted some other
operational flexibility in terms of
moving on. So we talked about the
different schemes that the fund managers
can offer in the IFSE. I'll just touch
upon some of the major characteristics
of these schemes. Venture capital
schemes are those schemes like I
mentioned uh where uh the larger
objective of the fund manager is only to
invest in such companies uh which are
typically startups in nature and uh you
know therefore these are young companies
dealing with the new age ideas new uh uh
you know lines of businesses. So for
venture capital schemes what you have
permitted what we have uh you know
mandated is that minimum 80% of
investments by these schemes need to go
in such companies which are less than 10
years old.
For restricted schemes there are no such
requirements. Similarly for retail
schemes because these are expected to be
general purpose schemes. Uh if anyone is
aware about the general structure of um
Aifs under the se regime they would be
aware that se has prescribed three
different categories of AFS. category 1,
category 2 and category 3. IFSCA has
also uh broadly modeled the same
categorization concept in its uh for for
the restricted schemes. So under the
restricted scheme category uh fund
managers can have three different
category 1, two or three and uh category
1 and category two uh restricted schemes
are typically expected to invest a large
part of their portfolio in unlisted
schemes. Category three uh are such
schemes where uh you know complex
portfolios listed unlisted there are no
such restrictions in terms of the in uh
you know in in terms of the investment
universe. Uh the minimum number of
investors which are permitted under VC
scheme is 50. Uh sorry maximum number of
investors in a VC scheme is 50. For a
restricted scheme the maximum number of
investors per scheme has been fixed at
1,000. for retail schemes uh because the
these schemes are intended uh to be uh
you know offered to retail investors
which generally come at in large numbers
although at a smaller ticket size.
Therefore there is no maximum number.
However the minimum is uh kept at 20.
The minimum investment requirement for
different uh schemes is like this. For
VC scheme it is $250,000.
For restricted schemes it is $150,000.
What is important to be seen is in both
these schemes this the minimum
investment requirement gets exempted if
the investor qualifies to be an
accredited investor. So what is an
accredited investor and I'm sure a lot
of you would already be aware because
similar concept also happens to be uh
prevalent in the domestic market. So
accredited investor is an investor where
the regulator has prescribed certain
eligibility criteria and investors who
are able to meet that criteria get the
designation of accredited investors and
because they are able to meet that
criteria of uh maybe higher income,
higher net worth or having certain uh
you know capability which gives
regulators the impression that these
investors are sophisticated. These are
informed about the risk that they are
taking and therefore there is no
regulatory requirement of uh you know um
handholding them in the in the same
sense as it is typically required for a
retail uh investor. Therefore, for such
investors who are accredited investors
who are able to meet the eligibility
criteria, there is no minimum uh
investment requirement. For the
investors who are not able to meet the
accredited investor eligibility
criteria, the minimum requirement for
investment in a VC scheme is $250,000.
In a restricted scheme, it is $150,000.
In retail scheme, like I just mentioned,
there is no minimum investment
requirement prescribed under the
regulation. But fund managers have the
option to you know impose any minimum
investment requirement uh if they feel
that u it is important for uh their unit economics.
economics.
The minimum corpus for all these three
different types of scheme has been kept
at $3 million which is to be achieved in
a period of 12 months.
The uh uh but for the open-ended scheme
which is possible in in a in a in a
restricted scheme uh category or in a
retail scheme. The regulations allow the fund management activities to start
fund management activities to start taking place once the open-ended scheme
taking place once the open-ended scheme achieves uh $1 million of fundraised.
Skin in the game is an important uh critical uh you know investor protection
critical uh you know investor protection norm. Uh u for those who are aware about
norm. Uh u for those who are aware about SE regulations they would be knowing
SE regulations they would be knowing that similar skin in the game
that similar skin in the game requirement also exists in the SEB
requirement also exists in the SEB regime for SB AFS as well as uh mutual
regime for SB AFS as well as uh mutual funds. So if also um you know prescribed
funds. So if also um you know prescribed certain requirements for skin in the
certain requirements for skin in the game. Uh what we have also additionally
game. Uh what we have also additionally done is that uh recognizing the fact
done is that uh recognizing the fact that in some cases the investors do not
that in some cases the investors do not require the fund manager to invest. They
require the fund manager to invest. They are already probably uh comfortable with
are already probably uh comfortable with the fund manager's past track record or
the fund manager's past track record or they do not uh want or require the fund
they do not uh want or require the fund manager to also invest alongside them.
manager to also invest alongside them. Then in those cases certain scenarios
Then in those cases certain scenarios have been provided. the investors have
have been provided. the investors have been empowered under the regulations to
been empowered under the regulations to exempt the fund manager from uh
exempt the fund manager from uh investing in uh as by way of skin in the
investing in uh as by way of skin in the game contribution. So this
game contribution. So this >> a question a question has come actually
>> a question a question has come actually is there any criteria for the
is there any criteria for the shareholders of these proposed entities
shareholders of these proposed entities in terms of the nationality etc
in terms of the nationality etc >> in terms of the nationality.
>> in terms of the nationality. >> Yeah. So uh the primary and the foremost
>> Yeah. So uh the primary and the foremost criteria is that the shareholders of the
criteria is that the shareholders of the fund management entity need to be fit
fund management entity need to be fit and proper persons and what constitutes
and proper persons and what constitutes a fit and proper person is a is a sort
a fit and proper person is a is a sort of a long list of criteria which is
of a long list of criteria which is given in the regulations and uh this
given in the regulations and uh this also happens to be fit and proper also
also happens to be fit and proper also happens to be one of the criteria which
happens to be one of the criteria which is universally applicable. Most of the
is universally applicable. Most of the jurisdictions in most of the
jurisdictions in most of the jurisdictions the reg regulators have
jurisdictions the reg regulators have similar criteria that is the uh most
similar criteria that is the uh most important criteria. Apart from that
important criteria. Apart from that there is no requirement in terms of
there is no requirement in terms of nationality. The fund uh the shareholder
nationality. The fund uh the shareholder of a fund management entity can be an
of a fund management entity can be an Indian person. It can also be a foreign
Indian person. It can also be a foreign national. We uh the regulations do not
national. We uh the regulations do not uh make any distinction of that sort. I
uh make any distinction of that sort. I think you answered the next question
think you answered the next question because an Indian resident invest in
because an Indian resident invest in such scheme that you already answered
such scheme that you already answered actually. Then the next when the next
actually. Then the next when the next question come what is the difference in
question come what is the difference in nature of restricted schemes and retail
nature of restricted schemes and retail schemes?
schemes? Okay. So, restricted scheme are what are
Okay. So, restricted scheme are what are typically known as alternative
typically known as alternative investment funds where the scope of
investment funds where the scope of activities or the scope of investments
activities or the scope of investments is much more broader than what is
is much more broader than what is allowed typically allowed in a retail
allowed typically allowed in a retail scheme. In retail scheme, retail scheme
scheme. In retail scheme, retail scheme just think of it in this in the way that
just think of it in this in the way that uh these are practically nothing but
uh these are practically nothing but mutual funds because a lot of us are
mutual funds because a lot of us are investing in mutual funds uh under the
investing in mutual funds uh under the SEB regime. So, we are more familiar
SEB regime. So, we are more familiar with that terminology. So retail schemes
with that terminology. So retail schemes are mutual funds. So large part of their
are mutual funds. So large part of their investments would go into listed
investments would go into listed securities.
securities. As opposed to that restricted schemes
As opposed to that restricted schemes are those schemes where the investors
are those schemes where the investors are not you know small size investors.
are not you know small size investors. They are not retail generally uh you
They are not retail generally uh you know um if if we talk about their nature
know um if if we talk about their nature these are those investors who generally
these are those investors who generally have uh you know who who generally come
have uh you know who who generally come at a higher ticket size of $150,000 or
at a higher ticket size of $150,000 or who are accredited investors because we
who are accredited investors because we understand that these investors do not
understand that these investors do not require the same level of regulatory
require the same level of regulatory protection as that is required for a
protection as that is required for a retail investor. Therefore for
retail investor. Therefore for restricted schemes the activities the
restricted schemes the activities the scope of activities much more broader.
scope of activities much more broader. They can invest in unlisted securities.
They can invest in unlisted securities. They can in fact take leverage without
They can in fact take leverage without any restriction as long as the amount of
any restriction as long as the amount of leverage or the extent of leverage is
leverage or the extent of leverage is disclosed in the regulation. The
disclosed in the regulation. The regulator does not prescribe any limit
regulator does not prescribe any limit on the amount of borrowing or leverage
on the amount of borrowing or leverage that these schemes can do. Uh the these
that these schemes can do. Uh the these features or these flexibilities are not
features or these flexibilities are not permitted for a retail scheme. In retail
permitted for a retail scheme. In retail scheme the leverage is not a norm. It
scheme the leverage is not a norm. It can only be taken in exceptional
can only be taken in exceptional conditions. I think we have mentioned
conditions. I think we have mentioned that in the slide as well that uh for a
that in the slide as well that uh for a retail scheme borrowing is only
retail scheme borrowing is only permitted up to 20% uh of the AUM of the
permitted up to 20% uh of the AUM of the scheme and also the purpose of this
scheme and also the purpose of this borrowing is restricted to meet
borrowing is restricted to meet temporary liquidity related requirements
temporary liquidity related requirements as opposed to that in a restricted
as opposed to that in a restricted scheme borrowing can be a a uh an
scheme borrowing can be a a uh an integral feature of the investment uh
integral feature of the investment uh strategy. In a lot of cases, fund
strategy. In a lot of cases, fund managers uh uh you know take borrowing
managers uh uh you know take borrowing and uh invest that amount invest that
and uh invest that amount invest that borrowed amount uh with the intention to
borrowed amount uh with the intention to maximize the return of the investors. So
maximize the return of the investors. So these sort of flexibilities are
these sort of flexibilities are permitted in a restricted scheme but
permitted in a restricted scheme but these are not there for a retail scheme.
these are not there for a retail scheme. There's another question has come
There's another question has come actually
one minute that as you rightly said you know the resident investors can invest
know the resident investors can invest in these schemes because up to $250,000
in these schemes because up to $250,000 in a financial year we can make the
in a financial year we can make the investment but this mutual funds the
investment but this mutual funds the portfolio what they're having is all
portfolio what they're having is all overseas companies or domestic companies
overseas companies or domestic companies also and second thing is the stocks
also and second thing is the stocks which are listed on the exchanges these
which are listed on the exchanges these are all I presume that they are overseas
are all I presume that they are overseas stocks not the domestic stocks. Am I
stocks not the domestic stocks. Am I correct?
correct? >> So there are two sides to this question.
>> So there are two sides to this question. If there are uh Indian investors who are
If there are uh Indian investors who are investing in a scheme in IFSC, be it a
investing in a scheme in IFSC, be it a retail scheme or a restricted scheme, we
retail scheme or a restricted scheme, we don't expect or we don't uh you know um
don't expect or we don't uh you know um envisage those schemes investing back
envisage those schemes investing back into India. So for Indian investors
into India. So for Indian investors participating in a scheme that scheme is
participating in a scheme that scheme is essentially expected to invest only
essentially expected to invest only overseas
overseas because Indian investors otherwise so
because Indian investors otherwise so Indian investors who want to invest in
Indian investors who want to invest in India into India only why would they
India into India only why would they come to IFSC they have CB registered
come to IFSC they have CB registered schemes available to them. So it is
schemes available to them. So it is better that they go through the CB
better that they go through the CB registered schemes for their Indian
registered schemes for their Indian investments but for their overseas
investments but for their overseas investment requirement. If any Indian
investment requirement. If any Indian investor wants to invest overseas, first
investor wants to invest overseas, first of all, they also have options of SE
of all, they also have options of SE registered schemes uh available but
registered schemes uh available but considering that a lot of uh
considering that a lot of uh international schemes under the SE
international schemes under the SE regulations have already sort of hit
regulations have already sort of hit their quota and they are not accepting
their quota and they are not accepting any subscriptions anymore. So in IFSse
any subscriptions anymore. So in IFSse Indian investors have an option to
Indian investors have an option to invest in such schemes where the
invest in such schemes where the ultimate investment would be made into
ultimate investment would be made into securities listed in foreign
securities listed in foreign jurisdictions or securities of companies
jurisdictions or securities of companies in foreign jurisdictions.
in foreign jurisdictions. Now uh the securities of a company uh
Now uh the securities of a company uh listed uh which you talked about the
listed uh which you talked about the second point is does not necessarily be
second point is does not necessarily be on overseas sec overseas um exchanges.
on overseas sec overseas um exchanges. If a scheme has investments from foreign
If a scheme has investments from foreign investors. So for example, if there's an
investors. So for example, if there's an uh uh uh if there are US- based
uh uh uh if there are US- based investors, Australia based investors,
investors, Australia based investors, Japanese investors who are investing
Japanese investors who are investing into a scheme in IFSC,
into a scheme in IFSC, this scheme has the option to invest
this scheme has the option to invest either into India or into overseas
either into India or into overseas jurisdictions.
I hope I'm able to make this point uh clearly. It is only Indian investors
clearly. It is only Indian investors when they are participating when they
when they are participating when they are investing in an IFSC scheme the such
are investing in an IFSC scheme the such scheme cannot invest back into India.
scheme cannot invest back into India. For this for those schemes where the
For this for those schemes where the investments are coming from uh you know
investments are coming from uh you know non-Indian sources these schemes have
non-Indian sources these schemes have complete flexibility whether they want
complete flexibility whether they want to invest into India or whether they
to invest into India or whether they want to invest into overseas or partly
want to invest into overseas or partly into India partly into overseas.
into India partly into overseas. >> All right. Got it. Thank you.
>> All right. Got it. Thank you. The next question actually comes in
The next question actually comes in angel scheme maximum count is 200 per VC
angel scheme maximum count is 200 per VC undertaking where in VC uh the times
undertaking where in VC uh the times maximum count is 50 does it mean in the
maximum count is 50 does it mean in the case of the agel scheme has actually
case of the agel scheme has actually onboarded greater than 50 investor
onboarded greater than 50 investor should out for the non-retail scheme and
should out for the non-retail scheme and not authorize FME scheme.
not authorize FME scheme. Yeah, of course. So, if an FME intends
Yeah, of course. So, if an FME intends to uh deal with more than 50 investors
to uh deal with more than 50 investors in its scheme, clearly it cannot come
in its scheme, clearly it cannot come into the venture capital bucket. It will
into the venture capital bucket. It will mandatorily have to come into the
mandatorily have to come into the non-restricted scheme bucket. Uh sorry,
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