Issued by the Securities and Exchange Board of India (SEBI) on July 30, 2026, this circular operationalises the new GARUDA (Green-Channel: AIF Rollout Upon Document Acknowledgement) framework for Alternative Investment Funds. It takes effect immediately and applies to every PPM filed with SEBI from the date the underlying AIF (Second Amendment) Regulations, 2026 were notified.
The GARUDA mechanism is SEBI's newly operationalised framework for getting AIF schemes to market faster. Named for the mythical bird known for speed, it sets fixed, predictable timelines for launch — anchored to Merchant Banker certification for Regular schemes, and to self-certification by the Manager's CEO and Compliance Officer for AI only funds, LVFs and Angel Funds.
The change is rooted in amendments to the SEBI (Alternative Investment Funds) Regulations, 2012, notified on July 14, 2026 via Gazette Notification No. CG-MH-E-14072026-274483. This circular is the operating manual for those amendments — it rewrites paragraphs 2.4, 2.5 and 21.4.4 of the AIF Master Circular (dated June 3, 2026) and adds a new explanatory paragraph 2.7.
In effect, SEBI has built two speed lanes: a Merchant-Banker-certified lane for Regular schemes, and an even faster, self-certified lane for AI only Funds, Large Value Funds (LVFs) and Angel Funds — three categories that SEBI has separately decided need lighter-touch, disclosure-based oversight rather than upfront Merchant Banker certification.
Regular Schemes: The Merchant-Banker Route
New paragraph 2.4 of the Master Circular sets the operating rules for "Regular schemes" — essentially every AIF scheme that is not an AI only fund, LVF, or Angel Fund.
A new scheme can launch 10 working days after the PPM application is filed with SEBI, unless SEBI directs otherwise. For a fund's very first scheme, launch is permitted from the date SEBI registration is granted, or after the 10-working-day window — whichever is later.
What must accompany the PPM filing
Along with the applicable scheme fee, Regular-scheme PPMs must be filed on the SEBI Intermediary portal with four supporting items:
The Merchant Banker engaged to certify the PPM cannot be an associate of the AIF, its Sponsor, its Manager, or its Trustee — the certifying party must be genuinely independent, and it carries out due diligence on the accuracy and adequacy of every disclosure in the PPM.
Every Regular-scheme PPM must carry a standard disclaimer naming the Merchant Banker and confirming its due-diligence certificate, clarifying that SEBI's receipt of the PPM is not an approval, and fixing responsibility for accuracy jointly on the Manager and the Merchant Banker.
The Fast Lane: AI Only Funds, LVFs & Angel Funds
New paragraph 2.5 carves out an even quicker path for schemes serving only Accredited Investors — a category SEBI already treats as sophisticated enough to need lighter-touch protection.
AI only funds and LVFs are exempt from routing their PPM through a Merchant Banker or waiting for SEBI's comments. They can launch a scheme immediately upon filing the PPM. First schemes may launch from the date SEBI registration is granted.
Angel Funds get the same exemption under the SEBI (AIF) (Second Amendment) Regulations, 2026 — they may circulate their PPM to investors from the date of SEBI registration.
In place of a Merchant Banker certificate, these PPMs must be filed with a signed, stamped undertaking from the CEO of the Manager (or the equivalent role) and the Compliance Officer of the Manager, in the format at Annexure 7 — plus the applicable scheme/registration fee.
New AI-only schemes must carry the suffix "AI only fund" or "AIOF" in their scheme name (e.g. "Xyz AIOF"). New LVFs must carry the suffix "LVF" (e.g. "Abc LVF"). Treat this as a firm requirement for any new scheme in these categories going forward.
Definitions Added (New Paragraph 2.7)
A new explanatory paragraph clarifies three terms used throughout paragraphs 2.4–2.6:
Regular schemes — any scheme that is not an LVF, AI only fund, or Angel Fund.
Launch — the act of circulating the PPM to investors to solicit funds.
Working days — all days excluding Saturdays, Sundays and public holidays on which the relevant SEBI office is closed.
Amending a PPM After Launch
Paragraph 21.4.4 is also rewritten: AI only funds, LVFs and Angel Funds no longer need a Merchant Banker to intimate changes to an already-filed PPM. Changes go straight to SEBI, backed by the same CEO-and-Compliance-Officer undertaking format, this time at Annexure 17.
Old Framework vs. New Framework
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Compliance Checklist
CorpLawUpdates Analysis
The most consequential shift here isn't procedural, it's philosophical: SEBI is formally moving from a pre-vetting posture to a disclosure-and-accountability posture for AIFs. Regular schemes still get a Merchant Banker in the loop, but that Banker's certificate — not SEBI's sign-off — is now the gate. For funds that only serve Accredited Investors, SEBI has removed even that intermediary, betting that sophisticated investors and personal liability on the CEO and Compliance Officer are enough of a check.
The practical challenge will land on Merchant Bankers first. Independent due diligence with personal certification exposure is a materially heavier lift than a review-and-forward role, and Merchant Bankers who take on Regular-scheme PPM filings should expect their own liability exposure to rise accordingly — expect fee structures and engagement terms to shift in response.
For Managers of AI only funds, LVFs and Angel Funds, the operational upside is real — launch timelines compress from weeks to effectively immediate — but the CEO/Compliance Officer undertaking converts what used to be an institutional check into personal accountability. Compliance teams should treat the Annexure 7 and Annexure 17 undertakings as documents worth board-level attention, not routine paperwork.
Watch for SEBI to extend a similar acknowledgement-based model to other intermediary categories as it continues easing time-to-market for capital formation vehicles — GARUDA reads like a template SEBI may reuse rather than a one-off fix.
Source: SEBI Circular HO/19/19/11(2)2026-AFD-RAC2/I/17617/2026, dated July 30, 2026 — "Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA) Mechanism for Processing of Placement Memorandum of Alternative Investment Funds." Issued by the Alternative Fund & Distribution Department, SEBI, signed by Vikash Narnoli, Deputy General Manager.
This article is for informational and educational purposes only and does not constitute legal or regulatory advice. Verify with primary regulatory sources before acting.
