The Securities and Exchange Board of India (SEBI) has unveiled a comprehensive proposal to significantly streamline the approval process for Alternative Investment Fund (AIF) schemes. According to reports from The Hindu BusinessLine and Reuters, the regulator has introduced a 'Green-Channel: AIF Rollout Upon Document Acknowledgement' (GARUDA) framework that would enable regular AIF schemes to be launched within 10 working days of filing placement documents with SEBI, compared with the current 30-day timeline. For first-time schemes, launches would be permitted either from the date of SEBI registration or after 10 working days from filing, whichever is later. As reported by The Hindu BusinessLine, the move is intended to simplify the processing of placement memorandums (PPMs) and support quicker fundraising activity in the rapidly expanding AIF sector. SEBI stated that the earlier review process was time-consuming and that the proposed changes were aimed at enabling faster and more efficient deployment of capital.
Under the proposed framework, SEBI has introduced a lighter-touch regime for accredited investor-only schemes and angel funds. As reported by The Hindu BusinessLine and Reuters, managers of such funds would be allowed to file placement memorandums directly with SEBI without routing them through merchant bankers. The regulator has also proposed replacing the requirement for merchant banker due-diligence certificates with undertakings from the AIF manager's chief executive officer and compliance officer. These schemes could be launched immediately after filing documents with the regulator. For regular AIF schemes, filings routed through merchant bankers would qualify for the fast-track route unless SEBI raises concerns during the review period. SEBI has clarified that although the revised framework seeks to expedite fund launches, scrutiny of scheme documents will continue on a post-facto basis through sample checks based on risk assessment and other specific criteria.
According to SEBI's data cited in the proposal, the AIF industry has experienced remarkable growth with the number of AIFs more than doubling over the past five years to 1,849 as of March 31, 2026, up from 732 five years earlier. As reported by The Hindu BusinessLine and Reuters, cumulative commitments have reached ₹15.74 lakh crore with net investments reaching ₹6.45 lakh crore as of December 2025. SEBI stated that the proposals would lead to faster deployment of capital as the AIF industry expands rapidly. The move builds on a fast-track framework introduced on April 30, under which certain AIF schemes can be launched 30 days after filing documents. The regulator has also noted that accredited investors have seen a sharp increase, with their numbers climbing to 2,773 by April 2026 from 649 a year ago, and investments held by such investors accounted for around 30 per cent of overall AIF investments. As of December 31, 2025, accredited investors held AIF units with a par value of about ₹1.91 lakh crore, accounting for roughly 30% of total AIF investments.
SEBI has proposed allowing depositories to use up to 5 per cent of interest or income earned from Investor Protection Fund (IPF) corpus to meet expenses related to IPF Trust administration. As reported by The Economic Times, this proposal aims to align depository frameworks with existing provisions applicable to stock exchanges. Currently, stock exchanges are permitted to use up to 5 per cent of IPF investment income for dedicated employee expenses, Investor Service Centre administration, and statutory costs. Under the new framework, depositories would be allowed to use the permitted amount for expenses related to dedicated IPF Trust employees, administrative and statutory expenses including applicable taxes, audit fees, and charity commissioner fees. SEBI has specified that if expenses exceed the 5 per cent limit, the excess amount must be borne by the depository, and if the permitted amount is not fully utilized during a financial year, the unspent portion will be returned to the IPF corpus. As of March 31, 2026, the IPF corpus stood at ₹87.78 crore for National Securities Depository Ltd (NSDL) and ₹95.18 crore for Central Depository Services (India) Ltd (CDSL).
SEBI has invited public comments on the consultation paper until June 1, as reported by The Hindu BusinessLine. The regulator stated that the proposals aim to facilitate faster deployment of capital as the AIF industry continues to expand rapidly. According to Moneycontrol, SEBI had discussed these proposals with industry stakeholders, including the Indian Venture and Alternative Capital Association (IVCA), and they were also deliberated upon by the Alternative Investment Policy Advisory Committee (AIPAC). The regulator emphasized that the framework represents a significant shift toward faster regulatory approval processes while maintaining appropriate oversight mechanisms for alternative investment schemes. SEBI noted that regulators follow similar post-facto scrutiny mechanisms in other jurisdictions, including the International Financial Services Centres Authority (IFSCA) and securities regulators in Malaysia.
