INDIA Trends and Developments Contributed by: Tejesh Chitlangi, Sushreet Pattanayak, Pooja Mehta and Anita Jain, IC Universal Legal
in securities, using an alert-based surveillance system that each AMC will be required to implement. The mechanism also involves an escalation matrix, reporting requirements, and a whistle-blower policy. • Introduction of “Specialized Investment Fund”, a new product with a higher-risk threshold intended for investors with a larger risk appetite, offering greater flexibility and a higher ticket size to meet the needs of this emerging category of investors. • Introduction of a simplified regime for index funds, MF Lite, where the AMCs will have leaner regulatory compliance requirements based on lower risk and a simplified product structure. • Modification of conditions related to invest - ments in overseas mutual funds/unit trusts by mutual funds permitting investments in over - seas funds which have exposure to Indian securities, provided that exposure to Indian securities by such overseas funds corre - sponds to not more than 25% of their assets. • Amendments to regulations to ease invest - ment conditions for investments made in listed securities of group companies of the sponsor representing more than 25% of the net assets of the scheme of the mutual funds through equity-oriented exchange traded funds and index funds. • Simplification of the format of the Scheme Information Document (SID), in consultation with the Association of Mutual Funds in India (AMFI), to enhance readability and streamline preparation, with all mutual funds required to comply. • Recent notification by the SEBI of enforce - ment of insider trading regulations to bring mutual fund units under the ambit of insider trading norms (these had previously been excluded), ensuring enhanced regulatory compliance within the industry.
In addition, the SEBI has proposed to change the “skin-in-the-game” conditions for they key management personnel and investment teams of mutual funds in order to make them less oner- ous to key management personnel while ensur - ing that the spirit of the law is upheld. It has now been proposed to exclude the non-cash compo - nent while determining the minimum contribution by key management personnel in the schemes managed by a mutual fund, as well as evaluate the functional role of such key personnel. GIFT AIFs In recent years, GIFT City has emerged as a prom - inent international financial services hub, comple - menting the growth of domestic AIFs. The city has attracted numerous fund managers catering to both Indian and foreign investors, with its ranking improving from 67th to 57th in the Global Financial Centres Index 2024. The Honourable Minister of Finance and Corporate Affairs, Ms. Sitharaman, has emphasised GIFT City’s role in India’s vision to become a developed nation by 2047. The government’s commitment to promoting GIFT City is evident through amendments to the SEBI (Foreign Portfolio Investors) Regula - tions, 2019, which allow up to 100% aggregate participation by non-resident Indians, overseas citizens of India, as well as resident Indian indi - viduals in FPIs based out of GIFT City. The intro - duction of the IFSCA’s Single Window IT System (SWIT System) has further enhanced GIFT City’s appeal by streamlining the application process and bringing various government agencies and regulators onto a single digital platform. GIFT City is a competitive alternative to other tra - ditional financial hubs such as Singapore or Mau - ritius, particularly given India’s strong compliance with international Know-Your-Customer (KYC) and Prevention of Money Laundering (PMLA)
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