The Securities and Exchange Board of India (SEBI) has released a consultation paper introducing the 'Green-Channel: AIF Rollout Upon Document Acknowledgement' (GARUDA) mechanism. This initiative aims to streamline the launch process for Alternative Investment Funds (AIFs) to facilitate more efficient capital deployment and unlock value for the broader economy.
The proposal follows significant growth in the AIF industry, which expanded by 135% over the last five years, reaching 1,849 funds by March 2026. This rapid expansion led to a surge in applications, with 183 scheme applications pending as of March 31, 2026.
Under the proposed GARUDA framework, SEBI suggests distinct tracks based on investor sophistication:
Regular Schemes: For schemes primarily on-boarding investors with a minimum investment of INR 1 crore, the timeline for launching would be reduced from 30 days to 10 working days after filing with SEBI, unless otherwise advised.
Accredited Investor (AI) Only Schemes and Angel Funds: These funds, which cater to investors meeting specific net-worth or income criteria, would be eligible for immediate launch upon filing their Private Placement Memorandum (PPM).
To further simplify the process for AI-only schemes and Angel Funds, SEBI proposes removing the requirement to file through a Merchant Banker. Instead, the Merchant Banker’s due diligence certificate would be replaced by an undertaking signed by the Manager’s Chief Executive Officer and Compliance Officer.
SEBI intends to shift its oversight to post-facto scrutiny of scheme documents on a sample basis, selected through risk assessment. Entities found with irregularities during these reviews will remain liable for regulatory action. Public comments on these proposals are invited until June 01, 2026.
