The Securities and Exchange Board of India (SEBI) is considering a new regulatory framework for Alternative Investment Funds (AIFs) aimed at expediting the launch of fund schemes, Chairman Tuhin Kanta Pandey said on Wednesday. The proposed ‘Lodge and Launch’ model would allow certain AIF schemes to launch more quickly by relying on due diligence certificates issued by merchant bankers, reducing the time required for regulatory approvals.
Speaking at the IVCA Conclave 2026, Pandey explained that the framework is intended to improve ease of doing business, accelerate fund launches, and facilitate faster mobilisation of private capital. Under the system, specific AIF schemes could depend on merchant bankers for due diligence certification, while schemes restricted to accredited investors would place the responsibility for disclosure-related due diligence on the AIF manager. SEBI plans to consult with industry stakeholders on the proposal before finalising it.
India’s AIF industry has grown rapidly in recent years, with more than 1,700 registered funds. Total commitments stood at around Rs 15.74 lakh crore, and investments amounted to approximately Rs 6.45 lakh crore as of December 2025, reflecting a five-year compound annual growth rate of nearly 30 percent. Despite this growth, Pandey flagged challenges such as “mis-selling” and ensuring product suitability, noting that AIFs are designed for sophisticated investors due to their illiquid assets, long investment horizons, complex structures, and differentiated risk-return profiles.
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The SEBI Chief also highlighted a gap in capital allocation towards innovation and emerging sectors. Although AIFs are expected to finance early-stage ventures and high-uncertainty projects, only about Rs 205 billion had been invested in start-ups by the end of 2025. He stressed that fair and transparent valuation is essential, particularly for early-stage and illiquid assets, as credibility begins with disciplined pricing.
Pandey emphasized governance and transparency measures, including the dematerialisation of AIF units and reporting net asset values (NAV) to depositories. These steps, he said, strengthen monitoring, reduce operational risks, and build investor trust. Additionally, SEBI has simplified reporting requirements through comprehensive annual activity reports and rationalized quarterly filings, aimed at reducing the compliance burden without compromising oversight.
The SEBI Chairman underscored the strategic role of AIFs in financing sectors that enhance India’s long-term capabilities, such as renewable energy, energy storage, logistics, strategic manufacturing, and supply-chain infrastructure. “While AIFs are supporting growth today, they are also creating room for the next wave of entrepreneurship, infrastructure development, and enterprise expansion. They are carrying capital where traditional finance may not reach and linking private capital more closely to productive enterprise,” he said.
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