SEBI Seeks Greater Institutional Participation in the Infrastructure Sector

Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey said on Thursday that India’s infrastructure financing still depends heavily on a narrow set of investors. Reportedly, he called for greater participation from mutual funds, pension funds, and retail investors to widen the base and improve stability in the market.

Liquidity Concerns

At the NaBFID Annual Infrastructure Conclave in Mumbai, Pandey pointed out that secondary market trading in infrastructure securities remains limited. With institutional investors dominating, retail and foreign players have stayed cautious, resulting in weak liquidity and limited trading depth.

Asset Monetisation Plans

Pandey underlined the importance of speeding up asset monetisation across roads, railways, ports, airports, energy, petroleum, gas, and logistics. He said that while the Centre has pushed ahead, many state governments are yet to finalise their own monetisation plans. 

Instruments such as Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs), public-private partnerships, and securitisation were cited as options.

Fundraising Through Market Instruments

Over the last 5 years, 5 REITs and 23 InvITs registered with SEBI have raised about ₹1.5 trillion. Their combined assets under management reached ₹8.7 trillion by the end of FY25. Infrastructure-focused Category-I Alternative Investment Funds have invested more than ₹7,500 crore as of June 2025.

Municipal Bonds

Since 2017, urban local bodies have issued 21 municipal bonds, raising around ₹3,134 crore. However, challenges continue, including weak balance sheets and delays in securing approvals, which have limited the pace of fundraising in this segment.

Role of Capital Markets

Pandey said that relying mainly on banks and government budgets could lead to concentration risks. Market-based funding channels like corporate bonds, InvITs, REITs, and municipal bonds can spread the financing load across different participants.

Read more: Sebi Reclassifies REITs as Equity, Boosting Market Participation!

Conclusion

India’s infrastructure sector needs large amounts of long-term capital. SEBI has emphasised that bringing in more categories of investors and deepening market instruments will be critical to meeting this demand.

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