Sebi Proposes Easier Rules for REITs and InvITs to Boost Infrastructure Investments
India's markets regulator, Sebi, has put forward new proposals to ease investment rules for infrastructure and real estate trusts. The changes aim to give REITs and InvITs more flexibility in borrowing and investment management. Public feedback on the plans is open until February 26.
Under the current system, REITs and InvITs face strict limits on where they can invest their funds. They are largely restricted to high-risk or top-rated liquid schemes. Sebi now wants to broaden their options by allowing investments in a wider range of liquid mutual fund schemes.
Another key proposal involves InvITs holding investments in special purpose vehicles (SPVs) even after concession agreements expire or terminate. This would require meeting certain conditions. Sebi also plans to adjust the definition of SPVs, making it easier for InvITs to keep investing in operational entities.
For borrowing, Sebi has suggested relaxing rules when net borrowings exceed 49% of an InvIT's asset value. This would expand how fresh funds can be used. Additionally, the regulator wants to align investment conditions for private InvITs with those of public InvITs, particularly for greenfield projects.
The proposed changes follow Sebi's goal of improving ease of doing business for these trusts. At the same time, the regulator has stressed that prudential safeguards will remain in place.
The consultation period for these proposals runs until February 26. If approved, the changes would widen investment choices for REITs and InvITs while maintaining financial oversight. The adjustments could also simplify how these trusts manage their investments and borrowings.
