Special situation funds must be close-ended and constituted in an International Financial Services Centre as a company, limited liability partnership, trust, or another permitted legal form. Their tenure must be at least three years and disclosed in the placement memorandum. An extension of up to two years requires approval from investors holding two-thirds by value of investments. Any further extension requires express consent from willing investors and an exit opportunity for dissenting investors.

Special situation funds may be launched by a Registered FME through a private placement memorandum filed with applicable fees. Restricted schemes follow a green-channel process and may open for subscriptions once the placement memorandum is taken on record. The memorandum is valid for twelve months, within which the FME must achieve the prescribed minimum corpus and declare first close. A one-time six-month extension is available on payment of the prescribed reduced fee. Material changes must be immediately informed to the Authority.

Special situation assets include eligible stressed loans, security receipts issued by registered Asset Reconstruction Companies, and securities of investee companies with eligible stressed loans, security-receipt-backed borrowings, corporate insolvency proceedings, or continuing disclosed payment defaults. For companies under corporate insolvency resolution or with continuing defaults, relevant instruments or borrowings must be rated D or equivalent. A special situation fund invests in these assets under its investment objectives and may act as a resolution applicant under the Insolvency and Bankruptcy Code, 2016.

Regulation 53 permits a Registered FME to launch a special situation fund in accordance with Part D and the provisions of the governing Chapter. The authority to launch is qualified by compliance with that Chapter's applicable provisions, so the permission to establish the fund operates within the special situation fund framework.

Regulation 52 requires an FME or its associate to make and maintain a minimum contribution to a retail scheme, subject to specified exemptions. No contribution is mandatory for relocated schemes, index schemes, and qualifying fund of funds arrangements, including schemes investing only in index schemes or passive ETFs, where applicable disclosure and non-active-management conditions are met. The contribution must ordinarily be made within forty-five days, with a possible extension, and an FME's contribution may count towards applicable net-worth requirements.

Computation of NAV for retail schemes requires the Fund Management Entity to calculate net asset value daily for open-ended schemes and weekly for close-ended schemes, in the manner specified by the Authority. NAV calculation procedures and methodology must be fully documented, regularly verified, and amended as necessary.

Regulation 50 requires the fund management entity and fiduciaries of a retail scheme to comply with Sixth Schedule investment valuation norms. For NAV computation and disclosure, scheme assets must be valued by an independent eligible service provider, including specified registered fund administrators, custodians, credit rating agencies, valuers, or other persons specified by the Authority. This requirement is inapplicable to investments in regulated schemes that are independently valued, whether such investments are made directly or through a manager in IFSC, India or foreign jurisdictions.

Borrowing by retail schemes is permitted only for temporary liquidity needs connected with redemption. The borrowing must not exceed twenty per cent of the scheme's assets under management and cannot remain outstanding for more than six months.

Retail-scheme offer documents must contain material investment information, including objectives, investor profile, scheme strategy, tenure, fees, risk-management practices, and relevant fund management entity details. Material changes to fund strategy require consent from at least two-thirds of investors by value. Net asset value must be disclosed daily for open-ended schemes and weekly for close-ended schemes. Portfolios must be disclosed quarterly within one month of quarter-end, while other material information must be communicated immediately.

Retail schemes are subject to limits on unlisted securities, single-company exposure, sectoral concentration and investments in associates. Open-ended schemes generally have a cap on unlisted-security exposure, while close-ended schemes exceeding that threshold are subject to a minimum investor investment and an overall unlisted-security cap, subject to specified exemptions for eligible home-jurisdiction-regulated retail funds. Retail schemes must also meet a minimum scheme size, with open-ended schemes permitted to begin investment activity at a lower threshold and obtain a one-time extension to meet the required size.

Retail schemes may invest in listed, to-be-listed or traded securities, unlisted securities, money market and debt instruments, asset-backed or mortgage-backed securitised debt instruments, and disclosed units of other investment schemes. Derivatives, including commodity derivatives, are permitted only for hedging with suitable offer-document disclosure. Pending deployment of monies, the Fund Management Entity may use specified liquid investments. All investments must comply with regulatory requirements, the scheme's investment objective, and offer-document disclosures.

Retail schemes may be open-ended or close-ended. Close-ended schemes require a minimum three-year tenure disclosed in the offer document, and may be extended by up to two years with approval of investors holding two-thirds by investment value and approval of the Authority. Retail schemes must be established in an International Financial Services Centre as a company or trust under applicable Indian law and may pursue social venture, infrastructure, ESG, sectoral, thematic, asset-class, combined, retirement, or children's education investment strategies, subject to specified conditions.

Retail schemes must maintain at least twenty investors, with no individual investor contributing more than twenty-five per cent of the scheme's investment. Both the minimum investor threshold and the investor-concentration limit must be met within six months from closure of the offer under the International Financial Services Centres Authority (Fund Management) Regulations, 2025.

Retail scheme launches require the FME to file a draft offer document with applicable fees at least twenty-one working days before launch. The offer document remains valid for twelve months from communication that it has been taken on record, which is treated as a Certificate of Registration for Income-tax Act purposes. The FME must incorporate comments before launch, immediately disclose material changes, and obtain fiduciary approval before filing a retail scheme.

Retail Schemes may be launched by Registered FMEs (Retail) to pool money from all investors or a section of investors through an offer document. The pooled funds must be invested in permissible investments in accordance with the scheme's stated investment objective.

Restricted schemes may co-invest in permissible investments through a special purpose vehicle under the Authority's framework or through segregated portfolios issuing separate unit classes. Segregated-portfolio investments cannot be made on terms more favourable than those offered to the common portfolio, and their creation must be disclosed in the placement memorandum. A co-investment special purpose vehicle may undertake leverage if the placement memorandum discloses it.

Restricted schemes require the FME or its associate to maintain a prescribed minimum contribution, subject to a general 10% targeted-corpus ceiling. The contribution is not mandatory for relocated funds or schemes. The ceiling does not apply where specified non-resident ownership and investment-concentration conditions are met. Contribution proportionate to investor investment must be made within 45 days and maintained on an ongoing basis, subject to possible extension. Exemptions apply upon qualifying investor waiver, accredited-investor participation, or for fund of funds schemes investing in schemes with similar requirements.

Foreign-exchange market conditions kept the rupee under pressure against the US dollar amid global risk aversion and elevated crude oil prices. A correction in crude prices, recovery in domestic equities, and suspected Reserve Bank of India intervention helped the currency recover much of its intraday decline. Dollar strength, rising bond yields, geopolitical tensions, weak monsoon rainfall, and inflation concerns were identified as continuing factors affecting near-term currency sentiment.

Regulation 39 requires an FME to compute the net asset value (NAV) of every restricted scheme at least monthly from the month investment activities commence. For a close-ended restricted scheme, NAV must be computed at least half-yearly. Where the FME has obtained prior investor approval, a close-ended scheme may compute NAV at least yearly from the relevant financial year. NAV calculation procedures and methodologies must be comprehensively documented, regularly verified, and amended where necessary.

Regulation 38 requires the fund management entity and fiduciaries of restricted, non-retail schemes to comply with Sixth Schedule investment valuation norms. For net asset value computation and disclosure, scheme assets must be valued by an independent service provider. The requirement is inapplicable to investments in other financially regulated schemes, made directly or through a manager in an IFSC, India, or a foreign jurisdiction, where the investee schemes are valued by an independent entity.