Another proposal in the draft paper allows REITs and InvITs to invest in liquid mutual fund schemes with higher risk levels with credit risk value of 10 or above. Photo Credit: HEMANSHI KAMANI
Securities and Exchange Board of India has proposed measures for real estate investment trusts and infrastructure investment trusts to provide operational and financial flexibility, reduce concentration and refinancing risk, expand their investable universe and bring in parity between public and private InvITs.
In a consultation paper floated on Thursday, the markets regulator has suggested allowing privately listed InvITs to invest up to 10 per cent of their asset value in pure greenfield projects to bring them on par with public InvITs.
To lower the cost of capital for InvITs and support long-term asset quality, the paper has proposed expanding the usage of funds when leverage exceeds 49 per cent to cover uses such as capacity augmentation, performance enhancement, non-routine, concession mandated maintenance and refinancing of existing debt subject to it being limited to the principal only and no increase in net borrowings.
Under the existing regulations, if the total consolidated borrowings of the InvIT exceeds 49 per cent of the value of its assets then any additional debt can be utilized only for acquisition or development of infrastructure projects. However there is no clarity whether such additional loans can be used to refinance existing loan or for improvements.
Another proposal in the draft paper allows REITs and InvITs to invest in liquid mutual fund schemes with higher risk levels with credit risk value of 10 or above.
Liquid schemes
At present they are allowed to invest in liquid schemes with a credit value risk rating of over 12, which represents the lowest risk of default.
The draft paper has also recommended amending the definition of Special Purpose Vehicle (SPV) to allow InvITs to continue holding such entities even after their concession periods have been terminated, with the rider that this would apply only to projects that are under public-private partnership.
Currently when the concession period of the infrastructure project expires then the SPV no longer holds the asset and it ceases to qualify as such.
The proposal is subject to conditions that the InvIT must exit or repurpose the SPV within a year of the termination, while there would be enhanced disclosures for both InvIT and the SPV.
Public comments on the proposals have to be submitted by February 26.
Published on February 5, 2026