Sebi plans to speed up AIF fundraise, use of capital

Synopsis

India's market regulator, Sebi, is proposing changes to speed up fundraising for alternative investment funds. A new 'green channel' will allow certain schemes to launch immediately. The waiting period for regular AIF schemes will be reduced. Accredited investors and angel funds will see greater flexibility, with direct filings replacing merchant banker involvement.

Mumbai: India's capital-markets regulator Monday proposed an overhaul of the approval process for launch of plans by alternative investment funds (AIFs) to speed up fundraising for those with high-risk appetite, allowing certain schemes to hit the market immediately under a new 'green channel' mechanism. The local AIF market is already worth more than $150 billion.

Monday's move by the Securities and Exchange Board of India (Sebi) is aimed at speeding up fundraising and capital deployment by reducing regulatory timelines and relying more on disclosures and due diligence undertaken by merchant bankers and AIF managers.

"AIFs, as an asset class, are instrumental in channelising the capital of sophisticated investors to companies in need. Given the rapid expansion of the AIF industry in recent years, efficient capital deployment plays a pivotal role in sustaining this momentum and unlocking value for the broader economy," Sebi said in a discussion paper seeking public comments.

"In this context, Sebi has recently reviewed the procedure for processing Private Placement Memorandums (PPMs) of AIFs for launch of schemes," it said.

The number of AIFs has surged to 1,849 as of March 2026, from 732 in March 2021, while total commitments raised by AIFs amount to ₹15.74 lakh crore, Sebi data showed.

At present, AIFs are required to file scheme documents through a merchant banker at least 30 days before launch, following which Sebi reviews the disclosures and may issue comments before allowing the scheme to be launched. Under the proposed framework, the regulator plans to reduce this waiting period for regular AIF schemes to 10 working days from 30 days, unless it raises objections.

For first-time schemes, launch would be permitted either after grant of registration or 10 working days after filing the application, whichever is later, it said.

Sebi has also suggested greater flexibility for schemes meant exclusively for accredited investors and angel funds.

Such funds would no longer need to route PPM filings through merchant bankers. Instead, AIF managers could directly file the documents with Sebi, backed by an undertaking from the chief executive officer and compliance officer of the fund manager, replacing the existing merchant banker due diligence certificate requirement.

Sebi has also proposed allowing accredited investor-only schemes to launch immediately upon filing the PPM, while angel funds would be allowed to immediately circulate placement memorandums to investors after registration. Accredited investors are considered to have an understanding of various financial products and the risks-returns associated with them and, hence, are able to make informed decisions regarding their investments.

The current accreditation numbers indicate growing traction in accreditation. The number of accredited investors as of April 30, 2026 stands at 2,773, a growth of 327% in the last 11months compared to 649 accredited investors by end of May 2025, Sebi said. “Scrutiny of scheme documents will continue to be carried out by Sebi post-facto on a sample basis, based on risk assessment and specific criteria.

...moreless

...moreless