The market regulator has simplified approval requirements, making it easier for alternative investment funds to introduce new investment schemes.
Mumbai: The Securities and Exchange Board of India (SEBI) has introduced a faster approval process for alternative investment funds (AIFs), allowing eligible schemes to be launched within 10 working days of filing their applications, unless the regulator raises objections.
The new framework, called Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA), aims to simplify and speed up the launch of investment schemes while maintaining disclosure and compliance standards.
Faster Launch Process Under GARUDA
Under the new circular, eligible AIF schemes can begin fundraising by circulating their Private Placement Memorandum (PPM) to investors 10 working days after filing, provided SEBI does not advise otherwise.
The regulator clarified that filing a PPM does not constitute regulatory approval. The document simply enables the fund to invite investments once the applicable conditions have been met.
For an AIF’s first scheme, however, the launch can take place only after SEBI grants the fund registration or 10 working days after filing, whichever occurs later.
Which Funds Are Covered?
The green-channel mechanism applies to regular AIF schemes, which include all schemes except:
- Accredited Investor-only Funds (AIOFs)
- Large Value Funds (LVFs) for Accredited Investors
- Angel Funds
To use the GARUDA route, the PPM must be filed through a SEBI-registered merchant banker via the SEBI Intermediary Portal, along with the prescribed scheme fee and a signed due diligence certificate.
Disclosure and Due Diligence Requirements
The filing must include:
- Fit-and-proper declarations for the AIF, sponsor, and manager.
- Details of the minimum continuing interest commitment.
- Permanent Account Number (PAN) details of the fund, scheme (where available), sponsor, manager, trustee, and specified officials.
SEBI said the merchant banker must independently verify the disclosures in the PPM and ensure they are accurate, complete, and adequate.
To avoid conflicts of interest, the appointed merchant banker cannot be an associate of the AIF, its sponsor, manager, or trustee.
Both the merchant banker and the AIF manager will remain jointly responsible for the accuracy of disclosures. Any misleading information or regulatory lapses could invite enforcement action.
Simpler Rules for AI-Only Funds, LVFs and Angel Funds
SEBI has also introduced a simplified filing process for:
- Accredited Investor-only Funds (AIOFs)
- Large Value Funds (LVFs)
- Angel Funds
These funds are not required to file their PPMs through merchant bankers or wait for SEBI comments before launching their schemes.
For AI-only Funds and LVFs, schemes can be launched immediately after filing the PPM with SEBI, although the first scheme can only be launched once the fund has received registration.
For Angel Funds, schemes can be marketed to investors from the date of registration.
These funds must submit their PPMs through the SEBI Intermediary Portal along with the prescribed fee and an undertaking signed by the CEO (or equivalent officer) of the AIF manager and the compliance officer.
Unlike regular AIFs, they may also file amendments to their PPMs directly with SEBI without involving a merchant banker, provided the required undertaking accompanies the filing.
New Naming Requirements
The regulator has also introduced naming rules for specialised AIF schemes.
- Accredited Investor-only schemes must end with “AI Only Fund” or “AIOF”.
- Large Value Fund schemes must end with “LVF”.
The naming convention is intended to help investors clearly identify the category of fund they are investing in.
Effective Immediately
The circular came into force on 30 July 2026 and applies to all Private Placement Memorandums filed with SEBI from 14 July 2026, the date on which the SEBI (Alternative Investment Funds) Second Amendment Regulations, 2026 were notified.
The GARUDA framework is expected to reduce administrative delays, simplify scheme launches, and improve the ease of doing business for India’s growing alternative investment fund industry while retaining regulatory oversight through disclosure-based compliance.
