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The Securities and Exchange Board of India (Sebi) has introduced the operational framework for GARUDA, a green channel mechanism aimed at simplifying and accelerating the launch of Alternative Investment Fund (AIF) schemes. The framework allows regular AIF schemes to be launched after a shorter processing timeline while creating a separate, simplified route for Accredited Investor-only funds, Large Value Funds and Angel Funds. Sebi has also strengthened disclosure requirements by defining the responsibilities of merchant bankers and AIF managers, while making it clear that filing a scheme document does not amount to regulatory approval.
The Securities and Exchange Board of India (Sebi) has released the operational framework for the Green Channel: AIF Rollout Upon Document Acknowledgement (GARUDA), a mechanism designed to simplify and speed up the launch of schemes by Alternative Investment Funds (AIFs).
The framework follows amendments made under the Sebi (Alternative Investment Funds) Regulations, 2012, which were notified earlier this month. The changes are intended to streamline the scheme launch process while maintaining disclosure standards and investor protection.
Under the revised framework, AIFs launching regular schemes can proceed with the launch 10 working days after filing the Placement Memorandum (PPM) with Sebi through a registered merchant banker, unless the regulator issues any directions during that period.
For first-time schemes, launches can begin from the date Sebi grants registration or after the expiry of the 10-working-day period from filing the application, whichever is later.
Sebi has also prescribed a simplified process for Accredited Investor-only (AI-only) funds, Large Value Funds (LVFs) and Angel Funds. These categories have been exempted from the requirement of filing their Placement Memorandum through a merchant banker and can launch their schemes immediately after filing the document with the regulator.
Under the framework, the first schemes of AI-only funds and LVFs can be launched from the date Sebi grants registration. In the case of Angel Funds, the Placement Memorandum can be circulated to investors from the date of registration.
To strengthen accountability, Sebi has made it mandatory for merchant bankers handling regular AIF schemes to independently carry out due diligence on all disclosures made in the Placement Memorandum. They must certify that the disclosures are true, fair and adequate. The regulator has also specified that merchant bankers appointed for filing Placement Memorandums cannot be associated with the AIF, its sponsor, manager or trustee, ensuring greater independence in the certification process.
The regulator has further introduced mandatory disclaimer clauses in Placement Memorandums. These clarify that submission of the document to Sebi should not be interpreted as regulatory approval and that responsibility for the accuracy and completeness of disclosures rests with the manager and the merchant banker.
For AI-only funds, LVFs and Angel Funds, the responsibility for disclosures will rest with the AIF manager. Instead of certification by a merchant banker, these funds will be required to submit an undertaking signed by the chief executive officer and compliance officer.
In addition, Sebi has directed that all new Accredited Investor-only schemes must include the words "AI only fund" or "AIOF" in their names, while Large Value Funds must use the suffix "LVF". The regulator has also exempted AI-only funds, LVFs and Angel Funds from routing changes in their Placement Memorandums through merchant bankers. Such revisions can now be filed directly with Sebi along with the prescribed undertaking.
The circular has come into effect immediately and applies to all AIF scheme Placement Memorandums filed with Sebi under the provisions of the Sebi (Alternative Investment Funds) (Second Amendment) Regulations, 2026.
Over the past few years, Sebi has introduced several regulatory reforms across the alternative investment industry to improve transparency, standardise disclosures and make fundraising processes more efficient. The GARUDA framework continues that effort by creating a faster approval pathway for eligible AIF schemes while retaining clear accountability for disclosures and compliance. The revised mechanism is expected to reduce procedural delays for fund managers and provide greater clarity on regulatory responsibilities without changing investor protection requirements.
Source PTI
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