Sebi Proposes ‘GARUDA’ Green-Channel To Cut AIF Scheme Launch Timeline To 10 Days

The Securities and Exchange Board of India (Sebi) proposed a new green-channel mechanism called GARUDA to speed up the launch of Alternative Investment Fund (AIF) schemes and ease fundraising processes for the industry. GARUDA stands for “Green-Channel: AIF Rollout Upon Document Acknowledgement”

In a consultation paper released on May 11, 2026, the regulator said the proposed mechanism is aimed at enabling “faster and efficient deployment of capital by AIFs” as the industry continues to expand rapidly.

The proposal seeks to reduce the waiting period for launching regular AIF schemes from the current 30 days to 10 working days after filing the Placement Memorandum (PPM) with Sebi.

Why Sebi Wants To Introduce GARUDA

Sebi said the AIF industry has grown rapidly over the last five years, leading to a sharp rise in applications for registrations and scheme launches.

The number of AIFs increased from 732 in March 2021 to 1,849 by March 31, 2026, a growth of 135 per cent.

As of December 31, 2025, AIFs had raised cumulative commitments of Rs 15.74 lakh crore, while net investments stood at Rs 6.45 lakh crore.

Sebi said efficient capital deployment has become increasingly important as the industry grows. It added that the review of the current process considered “the sophistication of AIF investors, the expertise of Merchant Bankers in performing due diligence of disclosures in the PPM, and extensive stakeholder consultations”.

What Changes For Regular AIF Schemes

Currently, AIFs can launch schemes only after waiting 30 days from the date of filing the PPM with Sebi through a merchant banker.

Under the proposed GARUDA framework, regular AIF schemes may be allowed to launch within 10 working days of filing the documents with Sebi, unless the regulator raises any objections.

Sebi proposed allowing faster launches of new schemes, while continuing post-facto checks on a sample and risk-based basis. For first-time schemes, launches would be allowed either after Sebi registration is granted or 10 working days from filing the PPM, whichever is later.

The regulator said this would “further enable faster and efficient deployment of capital by AIFs”.

Easier Rules For AI-Only Schemes, Angel Funds

Sebi also proposed major relaxations for Accredited Investor-only (AI-only) schemes and Angel Funds under the GARUDA framework.

No Merchant Bankers Required

Under the proposal, these schemes may no longer need to file their PPMs through merchant bankers. Instead, AIF managers would be allowed to directly submit the documents to Sebi.

The regulator has also suggested replacing the merchant banker’s due diligence certificate with an undertaking from the CEO and Compliance Officer of the AIF manager. This undertaking would confirm compliance with regulatory requirements.

Immediate Launch Flexibility

Further, the regulator proposed allowing AI-only schemes and Angel Funds to launch schemes immediately under the GARUDA framework.

For AI-only schemes, the regulator has suggested allowing the first scheme to launch from the date of Sebi registration itself. New schemes may also be launched immediately after filing the PPM and the required undertaking with Sebi.

For Angel Funds, Sebi has proposed allowing fund managers to start circulating PPMs to investors for fundraising from the date of registration itself, removing the waiting period.

Why Sebi Is Easing Rules For Accredited Investors

The regulator said Accredited Investors (AIs) are considered financially sophisticated investors who understand complex products and associated risks.

Sebi stated that AIs “are able to take informed decisions regarding their investments” and are “well-advised, due to their ability to hire expert managers/advisors and well-informed with sufficient financial acumen”.

The regulator also highlighted the growing traction in accreditation. The number of AIs rose to 2,773 as of April 30, 2026, from 649 in May 2025, a jump of 327 per cent in less than a year.

Further, AIs held AIF units worth around Rs 1.91 lakh crore as of December 31, 2025, accounting for nearly 30 per cent of total AIF investments.

Sebi To Continue Risk-Based Monitoring Of AIF Schemes

Even though the process is being relaxed, the regulator said it will continue monitoring AIFs through post-facto checks. The regulator said scrutiny of scheme documents “will continue to be carried out by Sebi post-facto on sample basis, based on risk assessment and specific criteria”. It further warned that “in case of any irregularity or lapse in the PPM, concerned entities shall be liable for action”.

Sebi has invited public comments on the GARUDA proposals till June 1, 2026.

Frequently Asked Questions

1. What is GARUDA proposed by Sebi?
GARUDA stands for “Green-Channel: AIF Rollout Upon Document Acknowledgement”. It is a proposed fast-track mechanism to simplify and speed up the launch of AIF schemes.

2. How will the GARUDA framework change AIF scheme launch timelines?
Under the proposal, regular AIF schemes may be launched within 10 working days of filing the PPM with Sebi, compared to the current waiting period of 30 days.

3. What relaxations are proposed for AI-only schemes and Angel Funds?
Sebi has proposed allowing these schemes to file PPMs directly without merchant bankers, replace due diligence certificates with undertakings from AIF managers, and launch schemes immediately after filing documents with the regulator.