SEBI Opens Faster Route For AIF Launches With New GARUDA Framework

Fund managers looking to launch alternative investment funds (AIFs) may soon spend less time waiting for approvals.

The Securities and Exchange Board of India (SEBI) has cleared a new framework called GARUDA - Green-Channel: AIF Rollout Upon Document Acknowledgement - which changes the way certain AIF schemes enter the market.

The change shifts the process away from extensive upfront scrutiny and towards a disclosure-based system where fund managers take greater responsibility for compliance.

Certain Funds Can Launch Soon After Filing Documents

One of the biggest changes under the new framework relates to Angel Funds and schemes meant exclusively for Accredited Investors.

Earlier, launching a fund often involved merchant banker certification and regulatory review before operations could begin. Under GARUDA, these categories can move ahead once the Private Placement Memorandum (PPM) is filed and SEBI acknowledges receipt of the documents.

In practical terms, this means fund launches could happen much sooner than before.

The responsibility for ensuring compliance, however, will now rest largely with the fund's CEO and Compliance Officer through self-certification.

For regular AIF schemes, SEBI has prescribed a 10-working-day approval timeline. Large Value Funds (LVFs) will continue under the regulatory treatment already available to them.

Industry Expects Fewer Delays In Capital Deployment

The announcement has drawn positive reactions from the investment ecosystem, particularly among venture capital and startup-focused investors.

One of the senior members of the management team at a venture capital firm said that lengthy vehicle-creation timelines often delayed the deployment of funds, even after capital had already been raised from investors.

According to her, quicker approvals could reduce both setup costs and waiting periods, helping investment capital reach startups and growth-stage companies faster.

Industry participants have long argued that fundraising cycles and investment opportunities often move faster than regulatory processes. The new framework appears designed to address that gap.

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Faster Entry, Stricter Accountability

While the approval process becomes lighter for certain categories, SEBI has not removed accountability.

Instead, the regulator is shifting responsibility closer to fund managers themselves.

The thinking is that sophisticated investors, such as accredited investors, are capable of evaluating risks independently. Because of that, SEBI is reducing some of the upfront checks while placing greater emphasis on the accuracy of disclosures.

Any incorrect, misleading or incomplete information could expose fund managers and compliance officials to regulatory action later.

Source:

The Hindu BusinessLine