Family offices, used by the rich to park some of their wealth overseas, have found a policy patron in the GIFT City regulator amid a broader, unstated dilemma of allowing unchecked outflows of money. The International Financial Services Centres Authority (IFSCA) is learnt to have approached the ministry of finance and RBI to explore regulatory changes that could pave the way for setting up family offices in GIFT City, the country’s only financial services centre, a person familiar with the matter told ET.Though permitted on paper, the formation of ‘family investment funds’ (FIF), or family office, in GIFT City, is caught in a regulatory tangle. The confusion stems from the legal interpretation of the new Overseas Investment (OI) Regulations issued a year ago as well as concerns that family offices in GIFT City could encourage many to sidestep restrictions on annual overseas investments by residents to transfer funds beyond what New Delhi and regulators are comfortable with.104866735Under the circumstances, bankers believe that if FIFs are allowed to take off in GIFT City, there could be guardrails, certain dos and don’ts on the kind and quantum of offshore investments by the family vehicles. “Any clarification should certainly deal with the specific classification of investment in FIFs as portfolio investment. Further, it is likely that certain conditions of minimum investment in IFSC, additional conditions or limits for investment in other overseas jurisdictions could also be imposed,” said Moin Ladha, partner at the law firm Khaitan & Co.Jaiman Patel, EY India partner (financial services), said: “FEMA OI Regulations that were issued in August 2022 provide a window for Family Offices to invest in an IFSC investment vehicle up to 50% of their net worth under the OPI route. This will permit HNIs to diversify their portfolio of investments across securities and geographies while being part of the Indian financial ecosystem.”