Synopsis: This article presents SEBI’s proposed GARUDA framework, which allows Alternative Investment Funds (AIFs) to launch their schemes more quickly through its green-channel acknowledgement system.
India’s alternative investment fund sector has experienced rapid development, which has resulted in more placement memorandum documents being submitted to the Securities and Exchange Board of India (SEBI). The Securities and Exchange Board of India established the GARUDA mechanism (Green-Channel: AIF Rollout Upon Document Acknowledgement) to improve the document verification process, which enables faster approval of eligible AIF schemes.
What is GARUDA?
The term “GARUDA” stands for Green-Channel: AIF Rollout Upon Document Acknowledgement that proposed green channel mechanism for processing placement memorandums filed by alternative investment funds with SEBI. Its key features:
- The process allows eligible AIF schemes to start their activities after they receive document verification.
- This mechanism helps to decrease the duration required for processing PPMs.
- The proposal establishes a regulatory framework that relies on disclosure requirements for its operations.
The SEBI aims to create efficient regulatory frameworks and enabling faster implementation of AIF schemes.
Why Did SEBI Propose GARUDA?
The current process for assessing placement memorandums creates delays that affect the initiation of AIF schemes, according to SEBI. At present, AIFs can launch schemes only after 30 days from filing as per SEBI. The AIF market has expanded so much that fund managers and investors now require quick processing times to meet their needs. The proposed new green channel mechanism, GARUDA, will launch schemes in 10 working days of filing their placement memorandums from the current 30 days. The consultation paper proposes GARUDA to
- Improve ease of doing business
- Accelerate development of AIF schemes
- Decrease time required for processing
- Simplify the steps needed for regulatory compliance
- Improve efficiency of capital investment processes
- Establish a green-channel system that will benefit qualified applicants
Existing Framework vs Proposed GARUDA Framework
Also read: Bond Taxation in India: Know How Interest, Indexation & Capital Gains Are Taxed in 2026
What are Placement Memorandums (PPMs)?
A Placement Memorandum (PPM) is an important disclosure document submitted by alternative investment funds to SEBI. The PPM is a crucial disclosure document for prospective investors. The document contains:
- Investment strategy
- Fund structure
- Risk factors
- Fees and expenses
- Investor rights
- Governance framework
- Operational information
What are Alternative Investment Funds (AIFs)?
Alternative Investment Funds (AIF) are privately arranged pooled financial investment vehicles governed by the SEBI (Alternative Investment Fund) Regulations. AIFs provide essential financial support to various startup businesses, emerging enterprises, infrastructure development projects, and private market investment activities. These funds generally include:
- Venture Capital Funds
- Private Equity Funds
- Hedge Funds
- Angel Funds
- Infrastructure Funds
Expected Benefits of GARUDA
If incorporated, the GARUDA mechanism could deliver a variety of advantages to the investment ecosystem in India.
- AIF managers find it easier to launch new schemes and facilitate faster rollout of schemes due to these new developments.
- The proposal supports India’s broader objective of simplifying regulatory processes.
- The framework will provide two benefits because it will decrease administrative delays and it will increase processing speed.
- Quicker scheme launches will allow funds to invest in opportunities, as they will eliminate unnecessary waiting times.
Note: SEBI released the consultation paper on May 11, 2026, which invited stakeholders to provide their feedback on the proposed GARUDA framework before its final implementation.
Conclusion
The proposal for GARUDA aims at the faster launch of AIF schemes through a green-channel mechanism. This is expected to decrease processing times while enhancing efficiency across India’s alternative investment market.
Written By Ameet S
