SEBI cuts approval time for alternative investment funds with new GARUDA framework

The Securities and Exchange Board of India (SEBI) has approved a new mechanism aimed at reducing the time taken to introduce Alternative Investment Fund (AIF) schemes, paving the way for quicker deployment of capital across sectors such as start-ups, private credit, infrastructure and unlisted businesses.

The initiative, known as the Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA), was earlier released for public consultation. The framework is designed to simplify the launch process for AIF schemes while ensuring that investor protection and regulatory accountability remain intact.

Under the revised process, most AIF schemes will be permitted to commence operations 10 working days after the placement memorandum is filed with SEBI through a merchant banker, provided the regulator does not raise any concerns. This marks a substantial reduction from the existing 30-day waiting period.

For the inaugural scheme of a newly registered AIF, launch eligibility will begin either on the date registration is granted or after the expiry of the 10-working-day period following placement memorandum submission, whichever occurs later.

SEBI said the framework seeks to improve ease of doing business and enable fund managers to mobilise and deploy capital more efficiently in response to market opportunities.

The regulator has also introduced a separate route for schemes catering exclusively to Accredited Investors as well as Angel Funds. These vehicles will be allowed to submit their placement memorandums directly to SEBI without engaging a merchant banker.

Instead of a due diligence certificate from a merchant banker, the responsibility for regulatory compliance will rest with the AIF manager. Senior officials, including the Chief Executive Officer, Compliance Officer and other authorised personnel, will be required to provide declarations confirming adherence to AIF regulations and applicable legal requirements.

Following acknowledgement of the submitted documents under the GARUDA framework, eligible schemes may proceed with their launch without being subjected to the current pre-launch review timeline.

According to SEBI, the move reflects the growing scale and maturity of India's AIF ecosystem and is intended to support faster capital allocation without compromising regulatory standards.

The regulator emphasised that the streamlined process does not represent a relaxation of supervision. Scheme documents will continue to be reviewed through a risk-based post-launch scrutiny mechanism, and SEBI will retain the authority to take action where disclosures are found to be inaccurate, incomplete or in breach of regulatory norms.

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Officials and fund managers providing compliance undertakings will remain fully responsible for the correctness and completeness of information furnished to investors and the regulator.