SEBI’s GARUDA framework cuts AIF launch time. Here’s what it means for Alternative Investment Fund investors

The Securities and Exchange Board of India (SEBI) has introduced the Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA) framework, allowing eligible Alternative Investment Fund (AIF) schemes to launch within 10 working days of filing their Private Placement Memorandum (PPM), unless the regulator raises objections.

The new framework replaces a process that often took around a month for scheme launches. While GARUDA is aimed at improving ease of doing business for the alternative investment industry, experts believe its benefits could also extend to investors through faster fundraising, quicker capital deployment and a wider range of AIF offerings over time.

How faster AIF launches could benefit investors

According to Chirag Shah, Executive Director, BlackSoil AMC, one of the biggest challenges under the earlier regime was the delay between filing a Placement Memorandum (PPM) and launching a scheme. Fund managers often had to wait close to a month, during which time-sensitive opportunities in private credit or pre-IPO investments could be lost.

By reducing the launch timeline to 10 working days, GARUDA enables fund managers to act on investment opportunities more quickly and close investor commitments before they lapse, Shah said. He added that the shorter timeline also lowers execution pressure and compliance costs, particularly for smaller and emerging fund managers.

Thomas Stephen, Director and Head – Preferred at Anand Rathi Share and Stock Brokers, said the framework is designed to improve ease of doing business by reducing procedural delays and enabling quicker capital deployment. Since AIFs often invest in private equity, venture capital and private credit, where transactions move quickly, faster scheme launches could help managers execute deals more efficiently.

Experts, however, do not expect the framework to trigger a surge in new fund managers overnight.

Nehal Meshram, Senior Research Analyst at Morningstar India, said GARUDA is more likely to result in faster launches of new schemes and follow-on funds than a dramatic rise in new entrants. The industry’s growth, she said, will continue to depend on investor demand, fundraising capability and the availability of attractive investment opportunities.

A similar view was shared by Nirav Karkera, Head of Research and Fund Manager at W by Groww, who said the immediate impact is likely to be an expansion in offerings from existing AIF managers, while any increase in new entrants is expected to be gradual.

Why experts say investor safeguards remain intact

A shorter launch timeline could raise concerns that regulatory scrutiny has been relaxed. However, experts say GARUDA changes the approval process without diluting investor protection.

Shah said the framework “compresses timelines, not oversight.” Instead of SEBI carrying out a detailed review before every scheme launch, independent merchant bankers must now verify that disclosures in the Placement Memorandum are accurate, fair and compliant. Merchant bankers are also required to remain independent of the AIF, its sponsor, manager and trustee.

Stephen said GARUDA shifts the process from an approval-based model to an acknowledgement-based one. Filing a Placement Memorandum with SEBI should not be interpreted as regulatory approval, he said. Instead, merchant bankers assume greater responsibility for conducting due diligence and certifying disclosures, while SEBI retains the authority to intervene within the 10-working-day window if it identifies any concerns.

Karkera also said the framework primarily removes procedural bottlenecks rather than easing regulatory oversight. The responsibility for disclosures and due diligence has shifted more heavily towards merchant bankers and fund managers, while SEBI continues to retain supervisory and enforcement powers.

Meshram echoed this view, saying GARUDA does not lower disclosure standards but places greater accountability on merchant bankers and AIF managers. Rather than reducing compliance requirements, the framework moves from prior regulatory processing to stronger accountability and post-filing oversight.

For investors, experts say GARUDA is primarily an operational reform rather than a change in how AIFs function. While it is expected to make fundraising and scheme launches more efficient, it does not alter the risks associated with AIFs or the fact that these investment vehicles continue to be designed for sophisticated investors who can commit capital over the long term.