Appointment of Custodian
Regulation 132
Appointment of Custodian
IFSCA (Fund Management) Regulations, 2025Amended in 2026Chapter VIII · General Obligations and Responsibilities
Chapter VIII · General Obligations and Responsibilities
Regulation 132 – Appointment of Custodian
Amended 2026 High importance about 3 min
Ongoing obligations & governance: Conduct, reporting, risk, custody, change in control and the day-to-day compliance load.
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In plain English
The FME must appoint an independent custodian for retail schemes, open-ended restricted schemes, and all other schemes with AUM above USD 70 million (fund-of-funds with custodian-appointed underlying schemes are exempt). The custodian must be IFSC-based; the January 2026 amendment allows a 24-month transition window during which an India/foreign-jurisdiction regulated custodian may be used.
In plain English
AUM > USD 70 million (plus retail / open-ended restricted)
Custodian trigger
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The rule, in its own words
Read the exact text of Regulation 132
132. The FME shall appoint an independent custodian to provide the custodial services for the following schemes:- (a) Retail schemes; (b) Open ended restricted schemes; and (c) All other schemes managing AUM above USD 70 Million. Provided that the requirement of appointment of custodian shall not be mandatory for fund of funds schemes where the underlying scheme(s) have appointed independent custodian(s). Explanation I. – The Custodian appointed under this regulation shall be based in IFSC, unless the local laws of the jurisdiction where the securities have been issued mandate appointment of a custodian in that jurisdiction, in which case, the FME may appoint a custodian based in that jurisd…
Show the full text
132. The FME shall appoint an independent custodian to provide the custodial services for the following schemes:- (a) Retail schemes; (b) Open ended restricted schemes; and (c) All other schemes managing AUM above USD 70 Million. Provided that the requirement of appointment of custodian shall not be mandatory for fund of funds schemes where the underlying scheme(s) have appointed independent custodian(s). Explanation I. – The Custodian appointed under this regulation shall be based in IFSC, unless the local laws of the jurisdiction where the securities have been issued mandate appointment of a custodian in that jurisdiction, in which case, the FME may appoint a custodian based in that jurisdiction regulated by the financial sector regulator in that jurisdiction for such securities and make necessary arrangement to provide such information to Authority whenever directed to do so. 49[Explanation II. – In case of schemes which are required to appoint custodian in IFSC in terms of the abovementioned provision, such appointment may be made within twenty four (24) months from the date of commencement of the International Financial Services Centres Authority (Fund Management) (Amendment) Regulation, 2026, during which period the FME may appoint an independent custodian in India, or any foreign jurisdiction, which is regulated by the financial sector regulator in that jurisdiction and make necessary arrangement to provide such information to Authority whenever directed to do so.]
Statutory text — Principal Regulations, 2025, consolidated as amended up to 10 September 2026 (including the Second Amendment, 2026). The notified Gazette text prevails. Tap a highlighted word for how it functions.
Amendment history (2 notes)
Footnotes from the consolidated text. They record earlier wording and are not operative law.
- 48 Inserted by the International Financial Services Centres Authority (Fund Management) (Amendment) Regulations, 2026, w.e.f. January 30, 2026
- 49 Substituted by the International Financial Services Centres Authority (Fund Management) (Amendment) Regulations, 2026, w.e.f. January 30, 2026. Prior to the substitution, it read as- “Explanation II.-In case of schemes which are required to appoint custodian in IFSC in terms of the abovementioned provision, if any agreement has been entered into with a custodian which is not based in IFSC as on the date of notification of these regulations, such schemes shall be required to appoint custodian in IFSC within twelve (12) months from the date of notification of these regulations.”
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Exceptions and conditions
Taken from the wording of this provision — the carve-outs and conditions worth reading closely.
Provided that the requirement of appointment of custodian shall not be mandatory for fund of funds schemes where the underlying scheme(s) have appointed independent custodian(s)
– The Custodian appointed under this regulation shall be based in IFSC, unless the local laws of the jurisdiction where the securities have been issued mandate appointment of a custodian in that jurisdiction, in which case, the FME may appoint a custodian based in that jurisdiction regulated by the financial sector regulator in that jurisdiction for such securities and make necessary arrangement to provide such information to Authority whenever directed to do so
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What this means in practice
Compliance actions
- Applies to
- Retail schemes, Open-ended restricted schemes, Schemes with AUM above USD 70 million
- Frequency
- Per scheme / AUM-triggered
- Trigger
- Retail / open-ended restricted / AUM above USD 70 million
- Evidence
- Custodian appointment agreement; Transition-window documentation
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The numbers that matter
| Requirement | Threshold | On crossing |
|---|---|---|
| Custodian trigger | AUM > USD 70 million (plus retail / open-ended restricted) | Appoint an independent IFSC-based custodian |
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Where it connects
Refers to / depends on
Read alongside
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Check yourself
Quiz Centre
Test yourself on Regulation 132
11 questions in the unified bank test this regulation. Each explains every option and cites the provision.
Above what scheme AUM must an independent custodian be appointed (in addition to retail and open-ended restricted schemes)?
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Your notes
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Ongoing obligations & governance