SEBI Proposes REIT InvIT Norm Easing for Cash Borrowing and Post-Concession Assets

India’s capital markets regulator has proposed a set of targeted relaxations for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), aimed at improving operational flexibility while maintaining investor protection standards. The measures focus on post-concession asset holding, treasury management and borrowing usage. 

Post-Concession SPV Holding and Greenfield Investment Flexibility 

In a consultation paper, SEBI has suggested allowing InvITs to continue holding special purpose vehicles (SPVs) even after the underlying project concession period ends.  

Under current rules, SPVs must hold at least 90% of assets in eligible infrastructure projects, but concession expiry often leaves trusts exposed to ongoing tax, litigation and contractual obligations, creating exit challenges. 

The proposal seeks to remove this regulatory ambiguity by permitting continued SPV holding in such transition periods. Industry executives said this would avoid forced divestments and support smoother asset monetisation.  

SEBI has also proposed aligning private InvIT investment norms with listed InvITs by allowing up to 10% of asset value to be deployed in greenfield projects under development. 

Surplus Cash Deployment and Borrowing Use Expanded 

The regulator has further recommended widening the range of liquid mutual fund schemes where REITs and InvITs can park surplus cash.  

At present, treasury deployment options are narrow. A broader universe is expected to improve returns on idle funds without materially raising risk. 

For InvITs with net borrowings above 49% of asset value, SEBI has proposed expanding permitted end-use of additional borrowings to include refinancing, operational needs and cash-flow management, instead of tight usage limits currently in place. 

Read More: SEBI Proposes Easier Exit Rules For AIFs Stuck In Tax And Legal Disputes! 

Conclusion 

The proposed changes signal a shift toward capital efficiency and operational practicality for REIT and InvIT structures, giving trusts more room to manage assets, cash and leverage while continuing to operate within investor safeguard frameworks. 

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