SEBI Proposes Cutting AIF Scheme Launch Wait To 10 Days; Angel Funds May Get Instant Fundraising

In a major ease-of-doing-business push for the alternative investment industry, Securities and Exchange Board of India (SEBI) has proposed cutting the waiting period for launching Alternative Investment Fund schemes from 30 days to just 10 working days, while also allowing Angel Funds and Accredited Investor-only schemes to begin fundraising almost immediately after filing documents with the regulator.

The proposals form part of SEBI's new "GARUDA" mechanism - Green-Channel: AIF Rollout Upon Document Acknowledgement. The regulator said the move is aimed at enabling faster and more efficient deployment of capital as the AIF industry witnesses rapid expansion.

According to SEBI data, the number of AIFs has jumped to 1,849 as of March 2026 from 732 five years ago, while cumulative commitments have reached Rs 15.74 lakh crore. Pending applications have also surged, with 183 scheme applications awaiting processing as of March-end.

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Under the first proposal, SEBI plans to reduce the existing 30-day waiting period for regular AIF schemes to 10 working days after filing placement memorandums through merchant bankers, unless the regulator raises objections. For first-time schemes, launches would be allowed either from the date of grant of registration or after 10 working days from filing, whichever is later.

The proposal effectively accelerates the timeline for fund managers to start deploying capital into startups, private credit, infrastructure and unlisted companies.

A second major proposal targets Accredited Investor-only schemes, which cater exclusively to financially sophisticated investors meeting SEBI-prescribed income and net-worth criteria.

For these schemes, SEBI has proposed removing the requirement of routing placement memorandums through merchant bankers. Instead, managers would be allowed to file documents directly with the regulator. Merchant banker due diligence certificates would also be replaced with undertakings signed by the CEO and compliance officer of the AIF manager.

Most importantly, AI-only schemes would be permitted to launch immediately upon filing placement memorandums with SEBI, eliminating the waiting period entirely.

SEBI justified the lighter-touch framework by noting that accredited investors are capable of independently assessing investment risks and usually have access to professional financial advisors. The regulator added that accredited investor participation in AIFs is rapidly increasing, with accredited investors accounting for roughly Rs 1.91 lakh crore of AIF unit holdings.

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Angel Funds are also set to receive similar operational relaxations. Under the proposal, Angel Fund managers would be allowed to directly file placement memorandums with SEBI without merchant banker intermediation. The existing merchant banker due diligence requirement would similarly be replaced with undertakings from senior management and compliance officials.

Additionally, Angel Funds would be allowed to immediately circulate placement memorandums to investors for fundraising from the date of registration itself, significantly speeding up early-stage capital mobilisation.

While SEBI is easing upfront approvals, the regulator clarified that oversight will continue through post-facto scrutiny of scheme documents on a sample and risk-based basis. Any disclosure lapses or irregularities could still invite regulatory action.

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