Sebi Considers Accelerated 'Lodge and Launch' Process for AIF Schemes

Sebi Explores Faster Approvals for Alternative Investment Funds

India's capital markets regulator, the Securities and Exchange Board of India (Sebi), is evaluating a "lodge and launch" framework to accelerate the time taken for new Alternative Investment Funds (AIFs) to come to market.

Under the proposed model, Sebi may rely on due diligence certificates issued by merchant bankers for certain AIF schemes. For schemes intended exclusively for accredited investors, the responsibility for disclosure diligence would rest with the AIF manager. This framework aims to improve ease of doing business, accelerate fund launches, and support faster mobilization of private capital.

Industry Growth

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India's AIF industry has expanded rapidly in recent years, with over 1,700 registered AIFs as of December 2025. Total commitments to these funds stood at approximately ₹15.74 trillion, while investments had reached around ₹6.45 trillion. The industry has grown at a compound annual growth rate of nearly 30% over the past five years, according to Sebi.

Accredited Investors

The number of accredited investors rose to 2,181 as of February 20 from 649 in May 2025. Such investors account for about 30% of total AIF investments. Sebi is exploring ways to leverage digital public infrastructure to further ease and streamline the process of accreditation, aiming to reduce costs and make the process accessible to eligible investors.

Challenges and Risks

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Sebi has flagged several challenges and risks of investing in AIFs that investors should be cautious about, including mis-selling and product suitability. AIFs have complex structures, illiquid assets, and long holding periods. Distributors and managers must ensure that disclosures are clear and that risk profiling becomes a genuine exercise rather than a procedural formality.

Investments in Startups

As of December 2025, about ₹205 billion of AIF investments had been directed towards startups. Sebi has expressed concerns that if private capital stays too conservative, the core purpose of the AIF framework will be lost, and the industry can do much more to back innovation-led sectors and emerging businesses.