Debt Index based ETF
Regulation 63
Debt Index based ETF
IFSCA (Fund Management) Regulations, 2025No change in 2026Chapter IV · Exchange Traded Funds (ETFs)
Chapter IV · Exchange Traded Funds (ETFs)
Regulation 63 – Debt Index based ETF
High importance about 3 min
Exchange Traded Funds: Index, debt, commodity and actively-managed ETFs, and how ETF units trade and redeem.
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In plain English
A Debt Index ETF must track an index of at least 5 issuers, no single issuer above 25% weightage, all constituents investment grade (except Government-securities indices), and replicate to at least 90% of total assets, with limited deviation allowed for issuance non-availability.
In plain English
≥5 issuers; single-issuer ≤25%; investment grade; ≥90% replication
Debt Index ETF
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The rule, in its own words
Read the exact text of Regulation 63
63. (1) The FME may launch an ETF replicating a Debt Index of IFSC or India or foreign jurisdiction.
(2) A debt index-based fund that seeks to replicate a particular index shall ensure that such index complies with the following norms:-
(a) The index shall have a minimum five (5) issuers as its constituents;
(b) No single issuer shall have more than twenty-five per cent. (25%) weightage in the index; and
(c) The rating of the constituents of the index shall be investment grade:
Provided that the conditions specified in clauses (a) and (b) shall not apply to index-based funds investing in Government securities.
(3) Debt index-based ETF shall replicate the underlying index to the extent of at …
Show the full text
63. (1) The FME may launch an ETF replicating a Debt Index of IFSC or India or foreign jurisdiction.
(2) A debt index-based fund that seeks to replicate a particular index shall ensure that such index complies with the following norms:-
(a) The index shall have a minimum five (5) issuers as its constituents;
(b) No single issuer shall have more than twenty-five per cent. (25%) weightage in the index; and
(c) The rating of the constituents of the index shall be investment grade:
Provided that the conditions specified in clauses (a) and (b) shall not apply to index-based funds investing in Government securities.
(3) Debt index-based ETF shall replicate the underlying index to the extent of at least ninety per cent. (90 %) of total assets:
Provided that if the ETF is not able to replicate the index due to non-availability of issuances of the issuer forming part of the index, the FME may consider such deviations that would lead to least possible tracking error and shall be in line with the disclosures in the offer document.
Statutory text — Principal Regulations, 2025 (as amended to 30 January 2026), consolidated where amended. The notified Gazette text prevails. Tap a highlighted word for how it functions.
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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 conditions specified in clauses (a) and (b) shall not apply to index-based funds investing in Government securities
Provided that if the ETF is not able to replicate the index due to non-availability of issuances of the issuer forming part of the index, the FME may consider such deviations that would lead to least possible tracking error and shall be in line with the disclosures in the offer document
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What this means in practice
Compliance actions
- Applies to
- ETF (Debt Index)
- Frequency
- At launch and ongoing
- Evidence
- Index constituent and rating analysis; Tracking-error records
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The numbers that matter
| Requirement | Threshold | On crossing |
|---|---|---|
| Debt Index ETF | ≥5 issuers; single-issuer ≤25%; investment grade; ≥90% replication | Index/replication norms |
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Where it connects
Read alongside
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Check yourself
Quiz Centre
Test yourself on Regulation 63
7 questions in the unified bank test this regulation. Each explains every option and cites the provision.
A Debt Index ETF must track an index of at least how many issuers, replicated to at least 90%?
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Your notes
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