The Securities and Exchange Board of India has proposed a new green-channel mechanism named GARUDA to enable faster launch of Alternative Investment Fund (AIF) schemes.
GARUDA, which stands for Green-Channel: AIF Rollout Upon Document Acknowledgement, is aimed at simplifying and accelerating the processing of Placement Memorandums (PPMs) filed by AIFs with SEBI.
Faster Launch Timeline for AIF Schemes
Under the proposed framework, regular AIF schemes would be allowed to launch within 10 working days of filing the Placement Memorandum with SEBI through a merchant banker, unless the regulator raises objections.
Currently, AIFs are permitted to launch schemes only after 30 days from the date of filing.
For the first scheme of an AIF, the launch would be allowed either:
- from the date of grant of registration, or
- after 10 working days from filing the application,
whichever is later.
SEBI stated that the proposal is intended to enable quicker and more efficient deployment of capital by AIFs.
Rapid Growth of the AIF Industry
The regulator highlighted the rapid expansion of India’s AIF industry in recent years.
According to SEBI:
- the number of registered AIFs increased from 732 five years ago to 1,849 as of 31 March 2026,
- cumulative commitments raised by AIFs reached ₹15.74 lakh crore,
- and net investments stood at ₹6.45 lakh crore as of 31 December 2025.
The growing number of scheme filings has increased the need for a faster and more efficient approval mechanism.
Relaxations for Accredited Investor-Only Schemes
SEBI has also proposed major relaxations for Accredited Investor-only (AI-only) schemes and Angel Funds.
Under the proposal:
- these schemes would no longer be required to file Placement Memorandums through merchant bankers,
- fund managers could directly file the documents with SEBI,
- accompanied by an undertaking from the CEO and compliance officer of the AIF manager.
Such schemes would be allowed to launch immediately upon filing the PPM without waiting for any review period.
Who Are Accredited Investors?
SEBI described accredited investors as financially sophisticated investors who satisfy prescribed income or net-worth criteria and are capable of independently evaluating complex investment products and risks.
The number of accredited investors has risen sharply:
- from 649 a year ago,
- to 2,773 as of 30 April 2026.
As of December 2025, accredited investors held AIF units with a par value of nearly ₹1.91 lakh crore, representing around 30 percent of total AIF investments.
Continued Regulatory Oversight
Although the proposed GARUDA mechanism would speed up scheme launches, SEBI clarified that it would continue to conduct post-facto scrutiny of scheme documents on a sample basis using risk assessment methods.
Any irregularities, disclosure lapses, or violations detected during review could result in regulatory action against the concerned entities.
Public Consultation Open Till June 1
SEBI has invited public comments on the proposal until 1 June 2026.
The GARUDA proposal reflects the regulator’s broader effort to improve ease of doing business in India’s alternative investment ecosystem while maintaining regulatory oversight and investor protection.