Securities market regulator SEBI has come up with guidelines to facilitate and regulate financial services relating to securities market in an International Financial Services Centre (IFSC) on Friday.
It has spelled out norms for operations of bourses, clearing houses, depositories and intermediaries in IFSCs; issue of capital and debt securities by firms in such centres in foreign currency and working guidelines for alternative investment funds and mutual funds in the proposed IFSCs.
IFSCs works like a SEZ for financial services and are aimed at allowing local firms to raise capital in foreign currency domestically as also facilitate transactions between two foreign entities. SEBI's Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015, which prescribes how IFSC's set up under Section 18(1) of Special Economic Zones Act, 2005, shall come into force on April 1, 2015.
In particular the guidelines lists the conditions on investment into and by an alternative investment fund, say a venture capital or private equity or hedge fund.
SEBI has said that in order to make an investment in an AIF or a mutual fund operating in IFSC, the investor shall be foreigner or a non-resident Indian or an institutional investor resident in India who is eligible under FEMA to invest funds offshore. In addition, Indian residents having a net worth of at least $1 million during the preceding financial year who is eligible under FEMA to invest funds offshore shall also be eligible to invest in such AIFs or mutual funds.
It has added that any AIF or mutual fund operating in IFSC shall accept money from eligible investors only in foreign currency and the funds in turn will be permitted to invest in securities which are listed in IFSC, securities issued by companies incorporated in IFSC or securities issued by companies belonging to foreign jurisdiction.
SEBI said it shall separately come out with the requirements for appointment of trustee, custodian and manager for AIFs and mutual funds besides raising of funds in foreign currency such as minimum investment amount, minimum corpus of fund, disclosures, investment conditions, valuations, types of schemes, professional qualifications.