Sebi exploring regulatory framework to speed up approval for AIFs, says Tuhin Kanta Pandey

Mumbai: The Sebi is exploring a new regulatory framework for Alternative Investment Funds that could speed up the launch of fund schemes, Chairman Tuhin Kanta Pandey said on Wednesday.

The proposed “Lodge and Launch” model would allow certain AIF schemes to be introduced faster by relying on due diligence certificates issued by merchant bankers, reducing regulatory approval time. Pandey said the framework aims to improve ease of doing business, accelerate fund launches and enable quicker mobilisation of private capital.

Under the system, some schemes may depend on merchant bankers for due diligence certification, while accredited investor-only schemes would place responsibility for disclosure-related checks on the AIF manager. Sebi will consult the industry before finalising the proposal.

India’s AIF sector has expanded rapidly, with more than 1,700 registered funds. Total commitments stood at about Rs 15.74 lakh crore and investments at around Rs 6.45 lakh crore as of December 2025, reflecting a nearly 30 per cent compound annual growth rate over five years.

Pandey flagged mis-selling and product suitability as key challenges, noting that AIFs are meant for sophisticated investors due to their complex structures, illiquid assets and long investment horizons. Clear disclosure of risks is essential alongside the promise of higher returns, he said.

He also highlighted the need for more capital to flow into innovation and emerging sectors. Only about Rs 205 billion of AIF investments had gone into start-ups by December 2025, indicating scope for greater allocation.

Pandey stressed that discipline in valuation, dematerialisation of AIF units and reporting of net asset value to depositories would improve transparency, strengthen monitoring and reduce operational risks. He added that simplified reporting requirements and lighter rules for accredited investor-only schemes would ease compliance while maintaining oversight.