Sebi issues operational framework to accelerate launch of AIF schemes
Sebi has operationalised the GARUDA green channel to speed up the launch of Alternative Investment Fund (AIF) schemes through a simplified filing process. The framework eases compliance for certain fund categories while strengthening disclosure and due diligence requirements for regular schemes.
Markets regulator Sebi on Thursday released an operational framework for a green channel mechanism, GARUDA, to simplify and speed up the launch of schemes by Alternative Investment Funds (AIFs).
The operational framework for the 'Green-Channel: AIF Rollout Upon Document Acknowledgement' (GARUDA) mechanism followed amendments to the Sebi (Alternative Investment Funds) Regulations, 2012, 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, Sebi said in its circular.
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.
The regulator has also 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.
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.
Merchant bankers appointed for filing PPMs cannot be associates of the AIF, its sponsor, manager or trustee.
The regulator has also introduced mandatory disclaimer clauses in PPMs, clarifying that submitting the document to Sebi should not be construed as regulatory approval and that the manager and merchant banker are responsible for the accuracy and completeness of disclosures.
For AI-only funds, LVFs and Angel Funds, 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.
Additionally, Sebi has directed that new Accredited Investor-only schemes must include the words "AI only fund" or "AIOF" in their names, while Large Value Funds must carry the suffix "LVF".
The regulator also exempts AI-only funds, LVFs and Angel Funds from routing changes in their PPMs through merchant bankers. Such changes can now be filed directly with Sebi along with the prescribed undertaking.
The circular has come into force with immediate effect and applies to all AIF scheme PPMs filed with the regulator from the date of notification of the Sebi (Alternative Investment Funds) (Second Amendment) Regulations, 2026.