Maintenance of Net Worth by Fund Management Entity


  • The International Financial Services Centres Authority (IFSCA) is pivotal in overseeing and regulating financial operations within International Financial Services Centres (IFSCs).
  • In a recent circular, IFSCA underscores the significance of maintaining net worth for Fund Management Entities (FMEs) functioning within IFSCs.
  • This emphasis on maintaining net worth highlights IFSCA’s commitment to ensuring the financial stability and integrity of FMEs operating within IFSCs.
  • By setting standards for net worth requirements, IFSCA aims to bolster investor confidence, promote transparency, and mitigate risks associated with fund management activities.
  • Furthermore, this directive reflects IFSCA’s proactive approach to regulatory oversight, as it seeks to create a conducive environment for the growth and development of IFSCs as globally competitive financial hubs.
  • By enforcing robust net worth standards, IFSCA aims to uphold the credibility and reputation of IFSCs, attracting investment and fostering innovation in financial services within these centres.


  • The circular, issued by the IFSCA in accordance with its authority under the International Financial Services Centres Authority Act, 2019, underscores the responsibility of Fund Management Entities (FMEs) to uphold specified levels of net worth consistently, as outlined in Regulation 8 of the IFSCA (Fund Management) Regulations, 2022.
  • As per the regulation, should the net worth of any FME drop below the designated threshold, the entity is prohibited from introducing new schemes, acquiring new clients, or engaging in fresh business activities permitted under the Fund Management Regulations until the net worth is restored to the prescribed level.
  • This circular is released in accordance with the authority granted under sections 12 and 13 of the International Financial Services Centres Authority Act, 2019, in conjunction with Regulation 146 of the Fund Management Regulations and will be effective immediately upon issuance.
  • This measure is implemented to bolster the financial stability and integrity within IFSCs, with the overarching goal of safeguarding the interests of investors and preserving the reputation of IFSCs as robust and reliable financial centres.
  • By ensuring that FMEs maintain adequate net worth levels, the regulatory framework seeks to foster a secure and conducive environment for investment activities within IFSCs, thereby contributing to the sustained growth and credibility of these financial hubs.


  • The circular emphasizes the IFSCA’s dedication to implementing prudent regulatory measures aimed at preserving the credibility and stability of IFSCs. FMEs are strongly encouraged to strictly adhere to the net worth maintenance stipulations to prevent regulatory penalties and facilitate smooth operations within IFSCs.
  • Furthermore, the circular underscores the importance of transparency and accessibility in regulatory affairs by making detailed information available on the IFSCA website. This reflects the authority’s commitment to ensuring that stakeholders have easy access to regulatory guidance and updates.
  • By emphasizing compliance with net worth requirements, the IFSCA aims to foster an environment of trust and reliability within IFSCs, ultimately contributing to their continued success as reputable financial centers. It also serves as a reminder to FMEs of their responsibilities in upholding regulatory standards for the benefit of investors and the broader financial ecosystem.

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