AIF Launch Rules 2026: GARUDA and the 12-Month First Close

SEBI’s GARUDA mechanism cut AIF scheme launches to 10 working days, but the AIF first close 12 months clock still runs. What it means for managers and investors.

Starting an AIF scheme in India used to mean a long wait. SEBI would review the placement memorandum disclosures and send comments, and the manager would revise, often over several rounds before the scheme could go ahead. In 2026 that wait has shrunk. A deadline now sits on the other side of it, and the AIF first-close 12-month rule is the part many people miss. 

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How AIF launch rules changed in 2026

Two SEBI circulars did most of the work. The first, dated April 30, introduced a fast-track route. AIFs other than large value funds for accredited investors could launch schemes and circulate the PPM 30 days after filing, unless SEBI advised otherwise. For a first scheme, the launch could start from registration or 30 days after filing, whichever was later. By March 31, 2026, all 59 new scheme applications pending under the earlier process had been cleared.

SEBI has made it faster to start raising money for an AIF scheme this year, but it has not given managers any extra time to finish raising it. The AIF's first close 12-month deadline is unchanged: a scheme must declare its first close within 12 months of the date the AIF becomes eligible to launch it.

What moved is the front end. Between April and July 2026, SEBI shortened the AIF fund launch timeline twice, first by letting schemes launch 30 days after filing without waiting for a formal sign-off, then by cutting that wait to 10 working days under the GARUDA mechanism. Managers can reach investors sooner, and SEBI now checks documents after launch more than before it.

This piece walks through what each change does, where the SEBI AIF first close rule fits in, and what an investor should look at before committing money.

First close is the date an AIF scheme formally closes its first round of investor commitments and begins life as a scheme. By then it must hold at least the minimum corpus the AIF Regulations set for its category or subcategory.

Three things hang off that date under the first-close framework SEBI issued in November 2022. The tenure of a close-ended scheme is counted from it. Until it is declared, an investor can withdraw or reduce a commitment, and the manager can still change the scheme's tenure. For open-ended Category III schemes, "first close" simply means the end of the initial offer period.

Till this year, a fund manager had to wait for SEBI to review the placement memorandum and give explicit approval before an AIF scheme could go out to investors. Two circulars and an amendment to the AIF Regulations have changed that.

The 30 April circular opened the SEBI fast-track AIF route. Angel funds and every scheme other than large value funds for accredited investors could launch and circulate the AIF placement memorandum 30 days after filing it, unless SEBI advised otherwise. Any comments SEBI made in that window had to be incorporated first.

GARUDA, short for Green-Channel: AIF Rollout Upon Document Acknowledgement, went further. The dates below show how it came together.

Two lanes under GARUDA

The GARUDA mechanism AIF framework splits schemes into a certified lane and a self-certified lane, and the difference decides how fast an AIF scheme launch can happen.

Regular schemes are everything that is not an AI-only fund, LVF or Angel Fund. An LVF is an AI-only fund with a minimum investor commitment of ₹25 crore. In the certified lane, the merchant banker cannot be an associate of the AIF, its sponsor, manager or trustee, and SEBI's comments, if any, still have to be incorporated. The self-certified lane skips both.

One point is easy to miss. SEBI's receipt of a placement memorandum is not an approval of it. The regulator has said it will keep a risk-based, post-launch check on documents, so the responsibility for accuracy sits with the manager and, in the regular lane, the merchant banker.

GARUDA stands for Green-Channel: AIF Rollout Upon Document Acknowledgement. A regular scheme can launch 10 working days after the AIF files its placement memorandum through a registered merchant banker, unless SEBI says otherwise. A first scheme can launch from the date of SEBI registration or 10 working days after filing, whichever comes later.

Some funds move faster. Accredited investor-only funds, large value funds and angel funds skip the merchant banker route and can launch right after filing or registration. Their scheme names must carry the “AI Only Fund” or “LVF” tag.

SEBI has not stopped caring about disclosure. It has moved the responsibility. Fund managers and intermediaries are now held accountable for what they disclose. Law firm ELP noted that SEBI’s ability to act against the entities concerned over a PPM shortcoming is likely to make managers nervous. One practical point: SEBI registration usually takes longer than 10 working days, so for a newly set-up manager, the first scheme will mostly launch on the registration date. 

The AIF fundraising timeline in India, from a manager’s side

The AIF fund launch timeline now looks like this: file the PPM, wait 10 working days, launch, and then raise enough to declare first close within 12 months. Faster launch does not mean faster fundraising. A manager who files before the investor pipeline is ready could burn through a good part of the 12 months before the first real conversation. Pre-marketing and investor conversations are now worth sequencing before the filing, not after it.

With SEBI no longer reviewing the PPM before launch, more of the checking falls on the investor. A few things are worth doing every time:

• Read the placement memorandum fully. Strategy, fees, tenure and exit terms are all there, and the document is now the manager’s own accountability.
• Ask whether first close has happened, and at what corpus. Until it does, the tenure has not started and your commitment can still be withdrawn or reduced.
• Check the scheme name. An “AI only fund” or “LVF” tag means the scheme has different investor eligibility. business-standard
• Ask how NAV is reported. AIFs must now upload the latest NAV for each ISIN to the depository system within 30 days of valuation. legaleraonline
• Ask how investments are allocated across investors. Investments made on or after February 1, 2026 must follow the allocation methodology the fund has disclosed. legaleraonline
• Confirm registration and look at the manager’s track record.

Faster launches help good managers get to market sooner. The investor still has to do the slow part, which is reading the document.