The Securities and Exchange Board of India (SEBI) has approved the GARUDA (Green-Channel: AIF Rollout Upon Document Acknowledgement) mechanism, transitioning the Alternative Investment Fund (AIF) framework from a traditional pre-clearance model to a fast-track, accountability-driven disclosure model. By introducing this regulatory green channel, SEBI aims to eliminate bureaucratic friction and accelerate time-to-market for fund managers, allowing private capital to flow into the economy much faster.
Welcoming this major reform, Archana Jahagirdar, Founder and Managing Partner, Rukam Capital, stated: “The AIF regime is a welcoming and a much awaited move by SEBI which is bound to see positive uptick of investor interest. The set up of the green channel will help in reducing timelines of fundraising and cost of setting up the vehicle because even if funds could raise the requisite capital from the market, they couldn’t really deploy anything till the vehicle was set up, leading to delays of deploying capital into startups. It is equally important to balance investor protection with ease of doing business. Faster, more efficient and cost-effective approvals will significantly improve market sentiment and accelerate capital deployment. I commend SEBI for taking this progressive step, which will go a long way in strengthening and growing India’s startup and investment ecosystem.”
Under the newly overhauled structure, SEBI has categorised AIF schemes to streamline approvals based on investor sophistication. Angel Funds and Accredited Investor-only (AI-only) schemes can now launch immediately once the Private Placement Memorandum (PPM) is filed and SEBI acknowledges receipt, completely bypassing the previously mandatory merchant banker certification. For these specialized funds, the responsibility of compliance shifts entirely to self-certification by the fund’s CEO and Compliance Officer. Meanwhile, Regular Schemes will benefit from a vastly compressed 10-working-day approval window, while Large Value Funds (LVFs) continue to operate under their pre-existing fast-track waivers.
This policy pivot comes at a time when India’s private wealth and venture capital sectors are scaling rapidly, necessitating modern regulatory infrastructure. Under the prior regime, fund managers faced a rigid 30-day waiting period alongside high compliance costs driven by merchant banker diligence.
While GARUDA dramatically improves capital agility for sophisticated investors, it simultaneously demands higher post-launch accountability. Because SEBI is reducing upfront vetting for expert investors who can manage their own due diligence, the liability for misleading or incomplete disclosures now falls directly on fund managers, ensuring market safety is maintained through strict downstream enforcement.
(Writers are interns with businessline)