SEBI's GARUDA mechanism — AIF schemes can now launch ten working days after filing
What is SEBI's GARUDA mechanism for AIFs?
GARUDA — Green-Channel: AIF Rollout Upon Document Acknowledgement — lets an Alternative Investment Fund launch a regular scheme ten working days after filing its private placement memorandum with SEBI, unless SEBI advises otherwise. A SEBI-registered merchant banker certifies the disclosures instead of SEBI issuing comments. Accredited-investor-only funds, large value funds and angel funds launch immediately on filing.
What changed
SEBI approved the GARUDA mechanism at its board meeting on 19 June 2026, notified the enabling amendment to the SEBI (Alternative Investment Funds) Regulations, 2012 on 14 July 2026, and issued the operating circular on 30 July 2026.
GARUDA stands for Green-Channel: AIF Rollout Upon Document Acknowledgement.
Before it, a fund filed its private placement memorandum with SEBI and waited for comments, then incorporated them, then launched. The wait had no fixed end. After it, the clock is ten working days and the party who signs off on the disclosures is a merchant banker, not SEBI.
The circular substitutes paragraphs 2.4 and 2.5 of the SEBI Master Circular for AIFs dated 3 June 2026 outright. It is not a gloss on the old process. It replaces it.
The ten-working-day clock
For a regular scheme — meaning any scheme that is not an accredited-investor-only fund, a large value fund or an angel fund — the rule is:
AIFs can proceed with launch of their new scheme after 10 working days of filing of application with SEBI, unless otherwise advised.
Two things carry weight in that sentence.
"Unless otherwise advised." The ten days are not an approval window that expires into a yes. They are a period in which SEBI may intervene and usually will not. Silence is the green channel.
"Working days." The circular defines them as all days excluding Saturdays, Sundays and public holidays on which the concerned SEBI office is closed, as published on SEBI's website. Ten working days is a fortnight of calendar time, and more across a festival cluster.
A fund's first scheme is treated differently. It may launch from the date of grant of SEBI registration, or ten working days after filing, whichever is later. A new manager cannot use the clock to get ahead of its own registration.
What must be filed
A regular scheme files its placement memorandum on the SEBI Intermediary portal, through a SEBI-registered merchant banker, with the scheme fee and four things:
- A signed merchant banker due diligence certificate in the format at Annexure 6 of the circular.
- Signed fit and proper declarations for the AIF, its sponsor and its manager, per Schedule II of the SEBI (Intermediaries) Regulations, 2008.
- Sponsor and manager declarations of minimum continuing interest.
- PAN copies for the AIF, the scheme, sponsor, manager, trustee, the directors or partners of each, and the key investment team — plus a machine-readable file listing the same names and PANs.
The merchant banker is the new gate
This is the substantive shift, and it is easy to miss under the language of speed.
The merchant banker must independently exercise due diligence over every disclosure in the memorandum, satisfy itself as to veracity and adequacy, and certify accordingly. It may not be an associate of the AIF, its sponsor, its manager or its trustee. Its name goes into the memorandum.
The circular then prescribes verbatim disclaimer text for every regular scheme's memorandum. Clause 3 of it is the one an investor should read twice:
It is to be distinctly understood that submission of the PPM to SEBI should not in any way be deemed or construed that the same has been approved by SEBI.
And the liability clause is explicit: the merchant banker and the manager are both responsible for the accuracy and completeness of every disclosure, and in case of any irregularity or lapse, "concerned entities shall be liable for action".
SEBI has not relaxed the standard. It has moved who certifies it, from a regulator reviewing documents after the fact to a named, unaffiliated intermediary signing before the fact. That is a stronger position for an investor than it first sounds, because it attaches a name and a liability to the disclosure.
It also does nothing whatever to make fund performance public. The memorandum is still a private document. AIF returns remain outside any public disclosure regime.
Accredited-investor-only funds, LVFs and angel funds
These three launch on filing. No merchant banker, no comment cycle, no ten days.
| Regular scheme | AI only fund / LVF | Angel fund | |
|---|---|---|---|
| Files through a merchant banker | Yes | No | No |
| Must incorporate SEBI comments | No — ten-day clock | No | No |
| May launch | After 10 working days | On filing | From date of registration |
| First scheme | Later of registration or 10 working days | From date of registration | From date of registration |
| Certifying signatures | Merchant banker | CEO + Compliance Officer of the manager | CEO + Compliance Officer of the manager |
An AI only fund is a scheme limited exclusively to accredited investors. A large value fund is an AI only fund in which each investor commits not less than ₹25 crore. The angel fund exemption arrives via the SEBI (AIF) (Second Amendment) Regulations, 2026.
All three file an undertaking signed and stamped by the chief executive officer and the compliance officer of the manager, in the format at Annexure 7, and carry their own prescribed disclaimer in which the manager, not a merchant banker, is the party that has exercised due diligence.
Two naming rules worth knowing
The circular makes fund names carry their own regulatory status:
- A new accredited-investor-only scheme must append "AI only fund" or "AIOF" to its name. For example, Xyz AI only fund.
- A new large value fund must append "LVF". For example, Abc LVF.
This is small and it is useful. From here, the register shows an investor-eligibility fact in the fund's own name, without anyone having to read a memorandum they cannot get.
Changes to a memorandum after launch
Paragraph 21.4.4 of the Master Circular is modified in the same stroke. AI only funds, LVFs and angel funds are now exempt from routing changes in the terms of their placement memorandum through a merchant banker. They file changes directly with SEBI, with the same CEO-and-compliance-officer undertaking, in the format at Annexure 17.
What this does not change
It does not change who may invest, the ₹1 crore minimum, the category definitions, the investor cap, or any disclosure obligation an investor can actually read. It changes the speed and the sign-off route for launching a scheme.
For a manager, that is a real operating gain: a fundraise timetable can now be planned around a known number of working days.
For an investor, the practical change is that the memorandum in front of you was certified by a named merchant banker who is not an associate of the fund. That is worth asking to see.
Source
SEBI circular HO/19/19/11(2)2026-AFD-RAC2/I/17617/2026, dated 30 July 2026 — "'Green-Channel: AIF Rollout Upon Document Acknowledgement' (GARUDA) Mechanism for Processing of Placement Memorandum of Alternative Investment Funds (AIFs) filed with SEBI" (circular PDF). Issued under Section 11(1) of the SEBI Act, 1992 read with Regulations 12, 19 and 36 of the AIF Regulations.
Enabled by the SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2026, notified 14 July 2026 via Gazette Notification CG-MH-E-14072026-274483. The SEBI Master Circular for AIFs dated 3 June 2026 has been updated to incorporate it.
Related
- SEBI AIF Regulations, 2012
- Accredited-investor-only AIFs
- AIF fees and costs
- AIF risks
- The register of SEBI-registered AIFs
This page reports the circular. It is not legal advice, and the circular itself governs.
Checked against source on 24 August 2026. This page is information, not legal, tax or investment advice.