Markets regulator SEBI on Thursday released an operational framework for the 'Green-Channel: AIF Rollout Upon Document Acknowledgement' (GARUDA) mechanism to simplify and speed up the launch of schemes by Alternative Investment Funds (AIFs). According to reports from CNBC TV18, The Economic Times, and Mint, the operational framework follows amendments to the SEBI (Alternative Investment Funds) Regulations, 2026, notified earlier this month. 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 otherwise advised by the regulator. The framework replaces a process that often took around a month for scheme launches and aims to reduce delays in launching investment schemes while keeping disclosure and due diligence requirements in place.
For first-time schemes, launches can commence from the date of SEBI registration or after the 10-working-day period from filing the application, whichever is later. As reported by CNBC TV18, The Economic Times, and Mint, SEBI has prescribed a streamlined process for Accredited Investor-only (AI-only) funds, Large Value Funds (LVFs) and Angel Funds. Such funds have been exempted from filing their PPM through a merchant banker and can launch their schemes immediately upon filing the PPM with SEBI. First schemes of AI-only funds and LVFs can be launched from the date SEBI grants registration, while Angel Funds can circulate their PPMs to investors from the date of registration. The move follows recent amendments to the SEBI (Alternative Investment Funds) Regulations, 2026, which were introduced to simplify operational processes for AIFs.
According to industry experts, the shorter 10-working-day launch timeline enables fund managers to act on investment opportunities more quickly and close investor commitments before they lapse. As explained by Chirag Shah, Executive Director at BlackSoil AMC, the framework reduces the delay between filing a Placement Memorandum and launching a scheme, which was a significant challenge under the earlier regime. Thomas Stephen, Director and Head at Anand Rathi Share and Stock Brokers, noted that the framework is designed to improve ease of doing business by reducing procedural delays and enabling quicker capital deployment. The shorter timeline also lowers execution pressure and compliance costs, particularly for smaller and emerging fund managers. However, experts do not expect the framework to trigger a surge in new fund managers overnight, with Nehal Meshram from Morningstar India suggesting it will result in faster launches of new schemes and follow-on funds rather than a dramatic rise in new entrants.
SEBI has mandated merchant bankers to independently conduct due diligence on all disclosures made in the PPMs of regular schemes and certify that the disclosures are true, fair and adequate. According to the regulator's circular, merchant bankers appointed for filing PPMs cannot be associates of the AIF, its sponsor, manager or trustee to ensure an independent review. As reported by Mint, the framework shifts the process from an approval-based model to an acknowledgement-based one, with merchant bankers assuming greater responsibility for conducting due diligence and certifying disclosures. Before filing the PPM, the appointed Merchant Banker must independently verify that all disclosures are accurate, complete and comply with regulatory requirements and submit a due diligence certificate along with declarations related to the AIF, its sponsor, manager, minimum continuing interest commitment and PAN details of key entities. The responsibility for disclosures will lie with the AIF manager, supported by an undertaking from the chief executive officer and compliance officer instead of a merchant banker for AI-only funds, LVFs and Angel Funds.
Despite the shorter launch timeline, experts emphasize that GARUDA does not dilute investor protection but rather shifts responsibility to merchant bankers and fund managers. As noted by Chirag Shah from BlackSoil AMC, the framework compresses timelines, not oversight, with independent merchant bankers now verifying disclosure accuracy. Thomas Stephen from Anand Rathi explained that filing a Placement Memorandum with SEBI should not be interpreted as regulatory approval, and SEBI retains the authority to intervene within the 10-working-day window if concerns are identified. Nirav Karkera from W by Groww confirmed that the framework primarily removes procedural bottlenecks rather than easing regulatory oversight, with responsibility for disclosures and due diligence shifting more heavily towards merchant bankers and fund managers. For investors, experts say GARUDA is primarily an operational reform rather than a change in how AIFs function, making fundraising and scheme launches more efficient while maintaining the fact that these investment vehicles continue to be designed for sophisticated investors who can commit capital over the long term.
