SEBI GARUDA: Launch an AIF Scheme in 10 Working Days
SEBI's GARUDA green-channel lets a new Regular AIF scheme launch 10 working days after filing the PPM, replacing the old 30-day minimum wait. AI-only and LVF schemes launch on filing; Angel Funds circulate from SEBI registration.
CA Harun Raaj
pvtltd.co
If you have ever launched an AIF scheme in India, you know the old timeline: file the Placement Memorandum (PPM) and wait for SEBI's comments before circulating it. SEBI's GARUDA mechanism — 'Green-Channel: AIF Rollout Upon Document Acknowledgement', specified by circular HO/19/19/11(2)2026-AFD-RAC2/I/17617/2026 dated 30 July 2026 — replaces that wait for Regular schemes with a 10-working-day green channel. A fund manager can launch 10 working days after filing the PPM with SEBI, "unless otherwise advised".
Key point: under GARUDA, a new Regular scheme may launch 10 working days after the PPM application is filed — 'launch' meaning circulation of the PPM to investors for soliciting funds (para 2.7.2). AI-only funds and LVFs go further: they launch immediately upon filing, with no 10-day wait at all. Angel Funds may circulate the PPM from the date SEBI grants registration.
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What is GARUDA?
GARUDA operationalises amendments to the SEBI (Alternative Investment Funds) Regulations, 2012 notified on 14 July 2026 (Gazette No. CG-MH-E-14072026-274483), substituting paras 2.4–2.5 of the June 2026 Master Circular for AIFs. The circular applies to PPMs of all schemes filed from the date of notification of the SEBI (AIF) (Second Amendment) Regulations, 2026, and came into force with immediate effect (para 6). The filing is an acknowledgement, not SEBI approval — the PPM must carry the prescribed disclaimer saying exactly that.
How the filing works (Regular schemes)
Step 1 — Appoint a SEBI-registered merchant banker.
The merchant banker "shall independently exercise due diligence of all the disclosures in the PPM, satisfy itself with respect to veracity and adequacy of the disclosures and provide the due diligence certificate" (para 2.4.1.3). Two constraints: the banker "shall not be an associate of the AIF, its sponsor, manager or trustee" (para 2.4.1.3), and its details must be disclosed in the PPM (para 2.4.1.4).
Step 2 — File the PPM on the SEBI Intermediary portal.
File "at the time of registration or prior to launch of new scheme, on SEBI Intermediary portal" with the applicable scheme fee plus: the signed Merchant Banker Due Diligence Certificate (Annexure 6), fit-and-proper declarations for the AIF, sponsor and manager, sponsor/manager minimum-continuing-interest declarations, and PANs of the fund and its key entities and people (para 2.4.1.2). Include the mandatory disclaimer: submission of the PPM "should not in any way be deemed or construed that the same has been approved by SEBI", and the manager and merchant banker confirm the PPM complies with SEBI laws and omits no material fact.
Step 3 — Wait 10 working days.
"AIFs can proceed with launch of their new scheme after 10 working days of filing of application with SEBI, unless otherwise advised" (para 2.4.1.1). 'Working days' means all days excluding Saturdays, Sundays and SEBI-office public holidays (para 2.7.3). First schemes are special: they launch "from the date of grant of SEBI registration (or) after 10 working days of filing of application with SEBI, whichever is later".
Who qualifies — and who skips the queue entirely
GARUDA's 10-day channel covers Regular schemes — "schemes other than Large Value Fund for Accredited Investors (LVF), Accredited Investor Only Fund ('AI only fund') and Angel Funds" (para 2.7.1). The other three categories do not wait at all:
New AI-only and LVF schemes must carry 'AI only fund'/'AIOF' or 'LVF' in the scheme name (paras 2.5.2.6–2.5.2.7).
What GARUDA does not change
- All substantive PPM disclosure requirements remain — the circular adds a filing channel, not waivers.
- Merchant-banker and manager liability is real: both are "responsible for ensuring the accuracy and completeness of all disclosures", and "in case of any irregularity or lapse in the PPM, concerned entities shall be liable for action" (para 2.4.1.5).
- SEBI may advise otherwise. The 10-day rule runs "unless otherwise advised" — if SEBI raises a deficiency, do not launch until it is resolved.
- The mandatory disclaimer must appear in every Regular-scheme PPM (para 2.4.1.4).
- AIF registration must pre-exist for the green channel to help — first schemes still wait for registration where that date is later (para 2.4.1.1).
Practical timeline
The binding clock is short: file a complete PPM with due-diligence certificate on the Intermediary portal, count 10 working days (excluding weekends and SEBI holidays), and the scheme may launch — earlier than any observation-letter era timeline, with AI-only, LVF and Angel routes faster still. The variable part is everything before filing: PPM preparation and merchant-banker review, whose duration depends on the fund's readiness, not the circular.
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FAQ
Does GARUDA apply to an existing AIF launching a second scheme?
Yes — any new Regular-scheme PPM filed after the Second Amendment notification goes through the 10-working-day channel; AI-only and LVF second schemes launch immediately upon filing, while Angel Fund circulation runs from the date SEBI grants registration.
Can the certifying merchant banker be connected to the fund?
No. The appointed merchant banker "shall not be an associate of the AIF, its sponsor, manager or trustee" (para 2.4.1.3).
What happens if SEBI raises a query within the 10-working-day window?
The launch rule is "after 10 working days ... unless otherwise advised" — if SEBI advises otherwise, do not launch until the matter is resolved.
Do the substantive PPM disclosure requirements change under GARUDA?
No. The mechanism changes filing and launch timing; all disclosure obligations under the AIF Regulations, 2012 and SEBI circulars remain.
Is the observation process completely eliminated?
For Regular schemes it is replaced by the 10-working-day green channel; AI-only funds, LVFs and Angel Funds are additionally exempt from filing through a merchant banker and from incorporating SEBI comments. Note that under Reg 12(3) SEBI may still communicate comments after filing, and the merchant banker or manager must ensure they are complied with (Reg 12(3A)).
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See Also
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