SEBI has approved the GARUDA framework, a new mechanism designed to speed up the launch of Alternative Investment Fund (AIF) schemes and simplify compliance requirements for certain categories of funds. The move is expected to reduce paperwork, lower costs, and make it easier for fund managers to bring investment products to market.
The Securities and Exchange Board of India (SEBI) has introduced the GARUDA framework to streamline the launch of Alternative Investment Fund (AIF) schemes. The framework, named Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA), aims to speed up approvals and simplify procedural requirements for eligible funds.
The new framework categorises AIF schemes into four groups: Large Value Funds (LVFs), Accredited Investor-only Schemes, Angel Funds, and Regular Schemes. While all three specialised categories will remain limited to accredited investors, only LVFs will require a minimum investment commitment of Rs 25 crore per investor.
SEBI has also removed the requirement for merchant banker certification for Accredited Investor-only Schemes and Angel Funds. Going forward, fund managers and designated officials will be allowed to self-certify compliance with regulatory requirements, helping speed up the launch process.
The new framework is expected to significantly shorten launch timelines for certain AIF schemes. Earlier, Accredited Investor-only Schemes and Angel Funds typically took around 30 days to receive clearance and required certification from a SEBI-registered merchant banker. Under GARUDA, these schemes can now be launched immediately after SEBI acknowledges the relevant documents. For specialised schemes, the approval timeline has been reduced to 10 working days, although the merchant banker requirement remains.
SEBI has also made fund managers and designated officials responsible for disclosures made by Accredited Investor-only Schemes and Angel Funds. For Regular Schemes, this responsibility will continue to be shared by merchant bankers and AIF managers.
The approval and categorisation framework is expected to reduce compliance costs and paperwork while making fund launches more efficient. The move is expected to benefit venture capital, private equity, and angel investment funds.
The Gazette notification for the amended AIF regulations is still awaited, and some provisions may take effect only after it is issued.
Read Article: Delhivery Unveils AI-Native Mapping Platform Built on Logistics Data
