Regulation and documents

2 · Think of it like thisThink of the referee for India's investment markets. SEBI writes the rules and penalises those who break them, for stock exchanges, brokers, mutual funds, AIFs and portfolio managers in mainland India.

2 · Think of it like thisThink of a referee for one special ground inside the stadium. IFSCA is the single regulator for financial services in India's international financial centres, such as GIFT IFSC.

2 · Think of it like thisThink of three lanes on a road for different kinds of vehicles. SEBI sorts AIFs into Category I (sectors the government wants to encourage, such as start-ups and infrastructure), Category II (everything else that does not borrow to invest, such as private equity and debt funds) and Category III (trading strategies that may use leverage, such as hedge funds).

2 · Think of it like thisThink of driving licences: two-wheeler, car and heavy vehicle. In GIFT IFSC, an FME registers as Authorised, Registered (Non-Retail) or Registered (Retail). Each step up allows more activities and needs more net worth.

2 · Think of it like thisThink of a detailed brochure that is also the rulebook. The private placement memorandum tells investors everything about the fund: strategy, fees, risks, team, tenure and how it will be wound up. It must follow SEBI's template for most AIFs.

2 · Think of it like thisThink of an invitation-only event, not open to anyone walking in. A private placement offers units only to selected investors, never through public advertisement. All AIFs raise money this way.

2 · Think of it like thisThink of a 'verified expert' badge. An accredited investor has been certified by an accreditation agency, based on income or net worth, as able to understand and bear the risks of these products. In return, some rules, such as minimum tickets, are relaxed for them.

2 · Think of it like thisThink of a minimum cover charge to enter a club. To keep these products for people who can bear the risk, each investor must put in at least a set amount, such as ₹1 crore in a SEBI AIF, with lower figures for employees and none for accredited investors.

2 · Think of it like thisThink of a driving licence before you drive. A fund or manager must be registered with the regulator before it can operate. In SEBI's world, the AIF registers; in GIFT IFSC, the manager registers as an FME.

2 · Think of it like thisThink of a background check before handing someone the keys to your house. Fit and proper looks at the people behind a fund: honesty, reputation, past conduct and financial soundness.

2 · Think of it like thisThink of a report card sent home every term. Funds send regular reports to the regulator about their activity, investments and compliance, on fixed dates.

2 · Think of it like thisThink of a members-only club. In GIFT IFSC, a restricted scheme is offered privately to a limited group of investors, with lighter rules than a scheme open to the public.

2 · Think of it like thisThink of a public bus: open to everyone, so it has stricter safety rules. A retail scheme in GIFT IFSC can take money from any investor, and so has more disclosure and investor-protection rules.

2 · Think of it like thisThink of not putting all your eggs in one basket. A concentration limit caps how much of a fund can go into one company, so one failure cannot sink the whole fund.

2 · Think of it like thisLike the menu with prices you read before ordering.

2 · Think of it like thisLike a premium account holder who negotiates their own terms.