SEBI's GARUDA Green-Channel System Eases AIF Scheme Launches
UPSC / SSC current affairs note · Economy
Why in news
SEBI has introduced a green-channel system (GARUDA) to expedite the launch of regular Alternative Investment Fund (AIF) schemes, allowing them to be launched 10 working days after filing applications unless advised otherwise. This regulatory change simplifies the process for AIFs, reducing delays and promoting ease of doing business in the capital markets. The move is significant for the investment landscape, as it aims to boost fundraising and innovation in the AIF sector.
Background
Alternative Investment Funds (AIFs) in India are regulated by SEBI under the SEBI (Alternative Investment Funds) Regulations, 2012. Previously, launching a new scheme required prior approval or comments from SEBI, which could be time-consuming. The new GARUDA mechanism is part of SEBI's ongoing efforts to streamline regulatory processes and encourage investment.
Key facts
SEBI introduced the Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA) mechanism via a circular dated 30 July 2026.
Under GARUDA, regular AIF schemes can be launched 10 working days after filing the Private Placement Memorandum (PPM) with SEBI, unless SEBI advises otherwise.
For an AIF's first scheme, launch can occur only after SEBI grants registration or 10 working days after filing, whichever is later.
Regular schemes are those other than Accredited Investor-only funds (AIOFs), Large Value Funds (LVFs), and Angel Funds.
PPMs for regular schemes must be filed through a SEBI-registered merchant banker on the SEBI Intermediary Portal, along with the scheme fee and a signed due-diligence certificate.
The merchant banker must independently verify all disclosures in the PPM and cannot be an associate of the AIF, its sponsor, manager, or trustee.
AIOFs and LVFs are exempt from filing PPMs through merchant bankers and can launch schemes immediately after filing, but their first scheme requires SEBI registration.
Angel Funds can circulate PPMs from the date of registration, without merchant banker involvement.
New naming requirements: AI-only schemes must include 'AI only fund' or 'AIOF' in their name; LVF schemes must end with 'LVF'.
The circular applies to PPMs filed from 14 July 2026, when the AIF Second Amendment Regulations were notified.
Prelims pointers
- SEBI: Securities and Exchange Board of India
- AIF: Alternative Investment Fund
- GARUDA: Green-Channel: AIF Rollout Upon Document Acknowledgement
- PPM: Private Placement Memorandum
- AIOF: Accredited Investor-only Fund
- LVF: Large Value Fund
- Angel Funds
- SEBI Intermediary Portal
- Alternative Investment Funds Second Amendment Regulations, 2026
- Date: 30 July 2026 (circular effective)
Mains angles
- Discuss the role of SEBI in regulating capital markets and promoting ease of doing business.
- Critically examine the impact of GARUDA on the growth of AIFs and investor protection.
- Analyze the regulatory framework for AIFs in India and recent reforms.