In June 2026, the Securities and Exchange Board of India (“SEBI”) approved a new framework for launching the schemes of alternative investment funds (“AIF(s)”), called the “Green-Channel: AIF Rollout Upon Document Acknowledgement” mechanism, or “GARUDA.” The objective of the framework is to enable AIFs to launch schemes faster, with significantly reduced documentation between filing and the raising of funds, while preserving SEBI’s ability to intervene where concerns arise. For an industry that has emerged as one of the most significant channels for private capital in India, this represents a notable development. Set out below is an overview of what GARUDA introduces, the manner in which SEBI arrived at it, the parties that stand to benefit and the allocation of responsibility under the revised framework.
Why Speed Became the Priority
An AIF is a privately pooled investment vehicle that collects money from a limited group of sophisticated investors and deploys it in companies, infrastructure, credit or other assets to which ordinary investors typically do not have direct access. Before an AIF may raise capital for a particular scheme, it must file with SEBI a private placement memorandum (“PPM”), being the offer document that sets out the proposed deployment of investors’ capital.
The sector has expanded considerably. The number of registered AIFs rose from 732 at the end of March 2021 to 1,849 by March 2026, an increase of 135% over five years. Cumulative commitments presently stand at approximately INR 15.74 trillion, with net investments of approximately INR 6.45 trillion as of December 2025, each growing at close to 30% per annum. This expansion has given rise to a backlog: as at March 31, 2026, 183 scheme applications were pending with SEBI. Where capital cannot be deployed in a timely manner, each period of delay carries a cost, and GARUDA is intended to mitigate such delay.
How The Framework Evolved
GARUDA represents the latest step in a deliberate, multi-year evolution in SEBI’s approach to the processing of PPMs. Over time, SEBI has moved away from reviewing every document prior to launch and towards placing reliance on market professionals, with selective checks undertaken thereafter.
The process began with disclosure standards. In February 2020, SEBI introduced standard PPM templates so as to ensure that every AIF disclosed a consistent minimum information. In October 2021, it required PPMs to be filed through a SEBI registered merchant banker, an independent intermediary whose function is to conduct due diligence on the disclosures prior to their submission to SEBI. The objective was to improve the quality of filings and reduce recurring errors.
By 2026, SEBI took the view that merchant bankers had acquired sufficient experience to permit the regulator to scale back its own review. On April 30, 2026, it introduced a “Fast-Track Mechanism” (i.e. the first phase): rather than awaiting SEBI’s review and clearance of each PPM, funds (other than the largest, accredited-only “Large Value Funds”) could launch 30 days after filing, unless otherwise advised. SEBI would instead examine documents after launch, on a risk-based sample. GARUDA constitutes the second phase. A consultation paper dated May 11, 2026 proposed a further reduction in timelines and, for the most sophisticated AIFs, the removal of the merchant banker from the process altogether. Following public comments and the recommendation of SEBI’s Alternative Investment Policy Advisory Committee, SEBI approved the framework on June 19, 2026 by way of an amendment to the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”).
What Changes, And For Whom
The relaxations under GARUDA are calibrated to the degree of sophistication of a scheme’s investors. The more experienced the investor base, the lesser the regulatory oversight required by SEBI. SEBI recognizes three broad categories of AIFs, summarized below:
| AIFs category | Who can invest | What GARUDA gives them |
|---|---|---|
| Regular schemes | Investors committing at least INR 10 million | Waiting period to launch reduced from 30 days to 10 working days from filing (still through a merchant banker) |
| Accredited Investor-only schemes | Every investor is an “accredited investor;” certified to have the net worth, income and financial knowledge to assess complex products independently | No merchant banker needed; due-diligence certificate replaced by an undertaking from the manager’s chief executive officer and compliance officer; launch permitted immediately on registration or filing |
| Angel Funds | Only accredited investors (following a recent change to the AIF Regulations) | Same relief as accredited-only schemes; PPM may be circulated to investors immediately on registration |
Large Value Funds are funds where each investor is accredited and commits at least INR 250 million. Such funds were already subject to the least oversight and fall outside the pre-launch review entirely.
In respect of accredited investor funds, SEBI has dispensed with two of the three earlier requirements: the merchant banker and the waiting period and substituted in their place the AIF’s own signed declaration. This reflects a deliberate decision, i.e. the number of accredited investors has risen sharply, from 649 in May 2025 to 2,773 by April 2026, and accredited investors already account for approximately 30% of all AIF investments. In SEBI’s view, such investors do not require the additional protections designed for the wider market.
Responsibility Shifts To Managers
Faster launches do not entail diminished accountability; rather, the responsibility is reallocated. SEBI’s review has not been eliminated but is now undertaken after launch rather than before. SEBI will continue to examine scheme documents post-launch, on a risk-based sample, and any irregularity or lapse renders the responsible parties liable to enforcement action. The manager and, where still involved, the merchant banker bears full responsibility for the accuracy and completeness of every disclosure in the PPM. In the case of accredited investor funds, the new chief executive officer and compliance officer undertaking assumes central importance: a personal, signed confirmation that the disclosures are true, fair and adequate.
This has two sides for managers: the pre-launch barrier has been removed, but the manager now assumes the responsibility previously discharged by the merchant banker and SEBI’s review. SEBI increasingly regards AIF’s representations to the market as a binding commitment rather than a mere statement of intent. The consequences of a careless or misleading PPM have not been reduced; the manager’s own statements are now subject to closer scrutiny.
How The Industry Benefits
For AIF managers and their investors, the benefits are evident.
- Capital is deployed sooner: Schemes that previously awaited clearance for a month, or longer through successive review cycles, may now launch within 10 working days, or immediately in the case of accredited-only funds, enabling managers to act upon opportunities while they remain available.
- Costs are reduced: The removal of the merchant-banker filing for accredited-only and angel funds eliminates a layer of fees and process.
- Accreditation is incentivized: By reserving the lightest treatment for AIFs with a fully accredited investor base, SEBI encourages the industry to move towards a more sophisticated investor base.
- The reform aligns India with international practice: Comparable regimes, including the International Financial Services Centres Authority in Gujarat International Finance Tec-City and the Securities Commission in Malaysia, have similarly moved from advance review to subsequent, risk-based sampling.
Key action for managers: As an initial step, mangers must review internal PPM sign-off procedures and, in the case of accredited-only and angel funds, to establish a robust chief executive officer and compliance officer attestation process, so that expedited launches are matched by the standard of care that the new framework requires.
Conclusion
GARUDA reflects a clear regulatory approach: regulation based on trust and subsequent verification rather than advance clearance. SEBI’s expectation is that experienced managers and sophisticated investors, underpinned by credible enforcement after the event, will serve the market more effectively than a requirement that each scheme be cleared in advance. For the industry, the result is faster access to capital and reduced costs, available in full measure to those managers prepared to assume the greater responsibility that accompanies it.
This insight has been authored by Swapneil B. Akut (Partner), Abhishek Singh (Counsel), Anushka Rungta (Associate) and Sankalp A. Dubey (Associate). They can be reached on sakut@snrlaw.in, abhisheksingh@snrlaw.in, arungta@snrlaw.in and sdubey@snrlaw.in, respectively, for any questions. This insight is intended only as a general discussion of issues and is not intended for any solicitation of work. It should not be regarded as legal advice and no legal or business decision should be based on its content.
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