SEBI Introduces GARUDA Green Channel for AIF Launches: Regular Schemes Can Launch in 10 Working Days
Published: July 30, 2026
Circular: SEBI Circulars | Alternative Investment Funds (AIFs)
The Securities and Exchange Board of India (SEBI) has introduced the Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA) mechanism, marking one of the most significant operational reforms for Alternative Investment Funds (AIFs) in recent years.
The objective is simple: reduce the time taken to launch AIF schemes while maintaining accountability through Merchant Banker due diligence and manager certifications. The mechanism follows SEBI’s consultation process initiated in May 2026 and is now effective through the July 30, 2026 circular.
What is GARUDA?
GARUDA replaces the traditional review-heavy process with a Green Channel model where eligible AIF schemes can proceed with launch after filing the Placement Memorandum (PPM), subject to specified conditions.
Rather than SEBI reviewing every PPM before launch, greater responsibility is placed on:
SEBI-registered Merchant Bankers
AIF Managers
Compliance Officers
The move is expected to significantly reduce fund launch timelines and enable faster capital deployment.
Timeline for Regular AIF Schemes
For Regular AIF Schemes (i.e., schemes other than AI-only Funds, Large Value Funds and Angel Funds):
New launch timeline
A scheme may be launched:
10 working days after filing the PPM with SEBI, unless SEBI advises otherwise.
For the first scheme of a newly registered AIF:
Launch can occur only after:
SEBI registration has been granted, or
10 working days from filing,
whichever is later.
This replaces the earlier, longer review process and provides much greater certainty around launch timelines.
Merchant Banker Plays a Central Role
The GARUDA framework significantly enhances the responsibility of the Merchant Banker.
The Merchant Banker must:
Independently conduct due diligence of the PPM
Verify the accuracy and adequacy of disclosures
Submit a Due Diligence Certificate
Be independent and not associated with the AIF, Sponsor, Manager or Trustee
The Merchant Banker’s details must also be disclosed in the Placement Memorandum.
Documents Required While Filing the PPM
Regular schemes must submit the following along with the PPM:
Merchant Banker Due Diligence Certificate
Fit & Proper declarations
Sponsor/Manager minimum continuing interest declaration
PAN details of:
AIF
Scheme (if available)
Sponsor
Manager
Trustee
Directors/Partners
Key investment team members
Immediate Launch for AI-only Funds, LVFs and Angel Funds
SEBI has introduced even greater relaxations for:
Accredited Investor Only Funds (AI-only Funds)
Large Value Funds (LVFs)
Angel Funds
AI-only Funds and LVFs
These funds:
Do not require Merchant Banker filing
Can launch immediately upon filing the PPM with SEBI
May launch their first scheme immediately after SEBI registration
Angel Funds
Angel Funds also receive similar treatment.
They:
Are exempt from Merchant Banker filing
May circulate the PPM immediately after obtaining SEBI registration
CEO and Compliance Officer Undertaking
Instead of a Merchant Banker certificate, AI-only Funds, LVFs and Angel Funds must submit a jointly signed undertaking from:
Chief Executive Officer (or equivalent)
Compliance Officer
confirming the accuracy and completeness of disclosures made in the Placement Memorandum.
SEBI Has Not Approved Your PPM
One important clarification under GARUDA is that:
Submission of the PPM should not be interpreted as SEBI approval.
The circular expressly states that SEBI:
Does not certify the correctness of disclosures
Does not guarantee the Manager’s capability
Places responsibility on the Manager and Merchant Banker for disclosure quality
Any incorrect, misleading or incomplete disclosures may result in regulatory action.
New Naming Requirements
SEBI has also prescribed naming conventions.
New schemes must include:
“AI only Fund” or “AIOF” for Accredited Investor Only Funds
“LVF” for Large Value Funds
What Does “Launch” Mean?
SEBI has clarified that the launch of an AIF scheme means:
Circulation of the Placement Memorandum (PPM) to investors for soliciting commitments.
Changes to Future PPM Amendments
For AI-only Funds, LVFs and Angel Funds:
Merchant Banker involvement is no longer required when filing future changes to the PPM.
Amendments can be filed directly with SEBI along with the CEO and Compliance Officer undertaking.
Impact on AIF Managers
The GARUDA mechanism is expected to:
Reduce scheme launch timelines
Improve certainty around fundraising schedules
Shift accountability toward Managers and Merchant Bankers
Lower procedural delays for sophisticated investor funds
Improve ease of doing business for India’s AIF industry
The reforms also align with SEBI’s broader objective of enabling faster deployment of capital while retaining post-facto regulatory oversight.