SEBI has introduced the GARUDA system to allow most Alternative Investment Fund (AIF) schemes to launch within 10 working days of filing. This initiative aims to speed up capital formation by simplifying the approval process for fund managers. While the move reduces administrative delays, the responsibility for accurate disclosures in scheme documents now rests heavily on merchant bankers and fund managers.
The Securities and Exchange Board of India (SEBI) has launched a new green-channel framework called GARUDA to expedite the launch of Alternative Investment Fund (AIF) schemes. The system, which stands for Green-Channel: AIF Rollout Upon Document Acknowledgement, allows most AIF schemes to be launched 10 working days after filing their applications, provided there are no regulatory objections. This change is designed to reduce the time fund managers spend in the pre-launch phase, helping them raise capital more efficiently.
Streamlined Filing and Responsibilities
Under the new rules effective since July 30, 2026, the launch of a scheme is defined as the circulation of the Private Placement Memorandum (PPM) to potential investors. For regular schemes, the process requires the filing of the PPM by a SEBI-registered merchant banker through the official intermediary portal. A key condition is that this merchant banker cannot be an associate of the AIF, its manager, sponsor, or trustee. By mandating an independent merchant banker, SEBI aims to ensure that disclosures within the PPM are verified for accuracy and completeness. Both the merchant banker and the fund manager bear the responsibility for these documents, and they may face regulatory action if irregularities are found.
Specific Routes for Different Funds
SEBI has created differentiated pathways to handle various types of funds. Accredited Investor-only funds, Large Value Funds (LVFs), and Angel Funds benefit from an even faster process. These specific categories are exempt from the requirement of routing their filings through a merchant banker and do not need to incorporate SEBI's comments before launching. They can proceed with the launch immediately after filing their PPMs, though the first scheme for any AIF can only begin after the fund receives its formal registration from the regulator.
New Transparency and Naming Standards
To ensure clarity for investors, SEBI has implemented mandatory naming conventions. Schemes aimed exclusively at accredited investors must now include 'AI only fund' or 'AIOF' in their names, while Large Value Funds must end their names with 'LVF'. These rules apply to all PPMs filed from July 14, 2026, onwards. For investors and market participants, the next steps will involve observing how quickly fund houses adopt these new naming protocols and how effectively the independent merchant banker system minimizes document-related errors. The primary monitorable remains whether this faster turnaround time leads to increased activity in the AIF space without compromising the quality of investor disclosures.