SEBI Proposes Depository Receipts for REITs and InvITs at IFSC

Summary: The Securities and Exchange Board of India (SEBI), through a Board Memorandum and subsequent Addendum, has proposed enabling provisions in the SEBI (Real Estate Investment Trusts) Regulations, 2014 and SEBI (Infrastructure Investment Trusts) Regulations, 2014 to permit Depository Receipts (DRs) backed by units of REITs and InvITs. The initiative is intended to facilitate foreign-currency investment and broaden access to overseas capital. As at 31 August 2026, six REITs and 26 InvITs were listed, with combined assets of approximately Rs. 10 lakh crore. The proposal initially confines listing and trading of these DRs to exchanges in India’s International Financial Services Centre, including India International Exchange and NSE International Exchange.

Following consultation, SEBI also proposed including privately placed InvITs, subject to minimum underlying-unit value and eligible-investor safeguards. The framework would aggregate directly held units with units underlying DRs when testing applicable 25% investment limits, exclude DR-backed units from domestic minimum public unitholding calculations, and allow subsequent DR offerings within a previously approved unitholder limit without a fresh approval. A merchant banker would oversee issue-related compliance and report to the manager or investment manager.

The Addendum proposes allowing Non-Resident Indians to hold these DRs, subject to applicable foreign exchange requirements, reversing the exclusion in the earlier draft. The memorandum seeks Board approval and authority for consequential regulatory action. Importantly, the annexures do not contain a final operative circular or gazetted amendment: the framework and notifications are to be issued after due process.

Securities and Exchange Board of India

Issuance of Depository Receipts on units of REITs and InvITs

1. Objective

1.1. This Board Memorandum proposes amendments to the SEBI (Real Estate Investment Trusts) Regulations, 2014 (“REIT Regulations”) and the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”) to provide an enabling provision for issuance of Depository Receipts (“DRs”) on units of REITs and InvITs, and seeks approval of the Board for the same.

2. Background

2.1. SEBI notified REIT Regulations and InvIT Regulations on September 26, 2014. As on August 31, 2026, 6 REITs and 26 InvITs are listed on stock exchanges. The cumulative assets under management (value of assets) for REITs and InvITs is approx. Rs. 10 lakh crores as on August 31, 2026.

2.2. REITs and InvITs are set up as a trust under the Indian Trusts Act 1882 and are registered with SEBI. REITs and InvITs primarily hold completed and revenue generating real estate and infrastructure assets respectively. REITs and InvITs are permitted to issue units which are denominated in Indian Rupees and are listed on recognized stock exchange(s) in India.

The unitholders are beneficial owners holding a fractional interest in the underlying assets of the REITs and InvITs. REITs and InvIT can invite subscription and allot units to foreign investors subject to guidelines specified by the RBI and the Government.

2.3. SEBI Hybrid Securities Advisory Committee (“HySAC”) provides recommendations, inter-alia, on development and regulation of REITs and InvITs in India.

3. Need for introduction of a regulatory framework for issuance of Depository Receipts on units of REITs and InvITs

3.1. A framework for issuance of DRs on units of REITs and InvITs will enable REITs and InvITs to issue DRs in permissible jurisdictions thereby providing an additional investment option for foreign investors. It will be beneficial for foreign investors as DRs allow trading in foreign currency on the permitted international exchange(s). It will also help in attracting foreign capital in REITs and InvITs.

3.2. International Financial Services Centres Authority (“IFSCA”) has requested the Board to consider allowing listing of DRs on units of Indian REITs and InvITs on the stock exchanges at International Financial Services Centre in India.

4. Extant Regulatory Provisions

4.1. The Depository Receipts Scheme, 2014 (‘DR Scheme’) notified by the Central Government, as amended from time to time, inter-alia states the following:

4.1.1. ‘depository receipt’ means a foreign currency denominated instrument, whether listed on an international exchange or not, issued by a foreign depository in a permissible jurisdiction on the back of permissible securities issued or transferred to that foreign depository and deposited with a domestic custodian and includes ‘global depository receipt’ as defined in section 2(44) of the Companies Act, 2013;

4.1.2. ‘permissible securities’ mean ‘securities’ as defined under section 2(h) of the Securities Contracts (Regulation) Act, 1956 and include similar instruments issued by private companies which:

4.1.2.1. may be acquired by a person resident outside India under the Foreign Exchange Management Act, 1999; and

4.1.2.2. is in dematerialised form.

4.1.3. The following persons are eligible to issue or transfer permissible securities to a foreign depository for the purpose of issue of depository receipts:

4.1.3.1. any Indian company, listed or unlisted, private or public;

4.1.3.2. any other issuer of permissible securities;

4.1.3.3. any person holding permissible securities;

which has not been specifically prohibited from accessing the capital market or dealing in securities.

4.2. Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (‘NDI Rules’) notified by the Central Government, as amended from time to time, inter-alia, provide provisions for investment in India by a person resident outside India:

4.2.1. Rule 6(d) of NDI Rules states that “a person resident outside India may invest in the depository receipts issued by foreign depositories against eligible securities in the manner and subject to the terms and conditions specified in Schedule IX.”

4.2.2. Paragraph 1(a) of Schedule IX of the NDI Rules states that “any security or unit in which a person resident outside India is allowed to invest under these rules shall be eligible instruments for issue of Depository Receipts in terms of Depository Receipts Scheme, 2014.”

4.2.3. Rule 6(c) read with paragraph 1 of Schedule VIII of the NDI Rules permit a person resident outside India (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India (other than an entity incorporated in Pakistan or Bangladesh) to invest in units of Investment Vehicles. As per Rule 2(ae) of the NDI Rules, ‘Investment Vehicle’ include REITs and InvITs registered with SEBI.

4.2.4. Paragraph 1(b) of Schedule IX of the NDI Rules states that “a person shall be eligible to issue or transfer eligible instruments to a foreign depository for the purpose of issuance of depository receipts in accordance with the Depository Receipts Scheme, 2014 and guidelines issued by the Central Government in this regard.”

4.3. SEBI Master Circular for Stock Exchanges and Clearing Corporations dated December 30, 2024, inter-alia, provides the framework for issue of DRs by companies incorporated in India and listed on a Recognized Stock Exchange in India (“Equity DR Framework”).

4.4. Presently, there is no enabling provision and thus no corresponding framework for issuance of DR on units of REITs and InvITs under the REIT Regulations and InvIT Regulations respectively.

4.5. DRs issued by REITs and InvITs registered with SEBI will be subscribed by foreign investors and hence such investment shall be subject to relevant rules and regulations framed under the Foreign Exchange Management Act, 1999 (‘FEMA’). As units of REITs and InvITs are ‘permissible securities’ under the DR Scheme and are eligible instruments for issue of DRs under the NDI Rules, it can be stated that DR Scheme and NDI Rules permit issuance of Depository Receipts on units of REITs and InvITs.

5. Public consultation

5.1. Based on the recommendations of the HySAC, SEBI issued a consultation paper titled Consultation Paper on Issuance of Depository Receipts against units of REITs and Publicly Listed InvITs on August 04, 2026, to provide a regulatory framework for DRs on units of REITs and Publicly Listed InvITs. The said consultation paper is attached as Annexure – I. The consultation paper sought comments from public on permitting issuance of DRs on units of REITs and InvITs and on draft DR framework for REITs and InvITs. The consultation paper also included a comparison of the proposed DR framework for REITs and InvITs with the Equity DR framework.

5.2. A total of 20 comments were received on the consultation paper from industry association, REITs/InvITs, IFSCA, law firms, Depository Bank, Stock Exchange and investors. A snapshot of the agreement status of the respondents is as under:

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5.3. The responses to the consultation paper were in favor of introduction of DRs on units of REITs and InvITs. A summary of comments received and our response on the same is attached as Annexure – II. Additionally, major suggestions received during the consultation and our views thereon are discussed as under:

5.3.1. Proposal in the consultation paper: Privately Listed InvITs were excluded from the DR framework at the public consultation stage as there is a requirement of trading lot size of Rs. 25 lakhs and investment by only institutional investors and body corporates in the initial offer of such InvITs.

Suggestion: Privately placed InvITs may also be included within the DR framework, subject to appropriate safeguards, such as each DR being represented by units corresponding to Rs. 25 lakhs and eligibility conditions limiting DR holders to institutional investors and body corporates.

SEBI views: In view of the public feedback, DRs may be permitted on units of a Privately Placed InvIT subject to the following safeguards:

i. Each DR proposed to be issued on units of a Privately Placed InvIT shall be backed by at least that number of units which carry such value as specified under Regulation 14(2)(c) of the InvIT Regulations as on the date of filing of initial offer document with SEBI.

ii. Any fresh issue of DR on units of a Privately Placed InvIT shall be subscribed only by such foreign investors as specified under Regulation 14(2)(b) of the InvIT Regulations.

Further, the Investment Manager of InvIT shall ensure that the agreement entered with the Foreign Depository, for the purpose of issue of DRs, provides that the DR holder, including its Beneficial Owner(s), shall ensure compliance with the requirement mentioned at point (ii) above.

5.3.2. Proposal in the consultation paper: The list of “Permissible Jurisdictions” and “International Exchanges” for the purpose of issuance, listing and trading of DRs on units of REITs and InvITs was aligned with the Equity DR Framework.¹

Suggestion: It has been suggested that DRs on units of REITs and InvITs may be permitted exclusively for listing and trading on stock exchanges in the IFSC, at least in the initial phase, rather than on international exchanges in other Permissible Jurisdictions. An exclusive IFSC route would enable access to global capital while leveraging GIFT IFSC’s well-regulated, internationally benchmarked ecosystem and strengthening its position as India’s own International Financial Services Centre.

SEBI views: The suggestion may be accepted as it provides a phased approach for the introduction of DRs on units of REITs and InvITs, with the International Financial Services Centre in India serving as the initial permissible jurisdiction. This would facilitate a measured introduction of the DR framework within a regulated ecosystem, while enabling access to international investors and foreign currency capital and providing an opportunity to assess its initial functioning before any further expansion in other permissible jurisdictions.

5.3.3. Proposal in the consultation paper: Regulation 22(6A) of the REIT Regulations / Regulation 22(5C) of the InvIT Regulations requires that non-sponsor entities and persons acting in concert with them shall not hold more than 25% of the value of outstanding REIT/InvIT units without prior unitholders’ approval. In this regard, it was proposed in the consultation paper that units held in the domestic market shall be aggregated with units underlying the DRs for determining the 25% holding limit.

Suggestion: It has been suggested to provide similar clarification on applicability of 25% limit under Regulation 14 of the REIT/InvIT Regulations which requires that the maximum subscription by any investor, other than the sponsor(s), its related parties and associates, in initial offer shall not exceed 25% of the total unit capital.

SEBI views: To ensure that the aforementioned 25% limit for investment in initial offer by an investor is not bypassed by utilizing the DR route, it is proposed to specify in the DR framework that for the purpose of computing the 25% investment limit, units of REIT / InvIT held in the domestic market by the DR holder, including its Beneficial Owner(s), aggregated with units underlying the DR held by such persons shall be considered.

5.3.4. Proposal in the consultation paper: The consultation paper proposed that any fresh issue of DRs shall require prior approval of unit holders of the REIT/InvIT.

Suggestion: Follow-on DR issues should be permitted within limits approved through a single enabling resolution, similar to Equity DR Framework as requiring approval for every follow-on issue could delay capital raising and reduce the utility of repeat DR issuances.

SEBI views: To provide operational ease, the suggestion may be accepted and accordingly, it is proposed that a fresh unitholder approval shall not be required in case of subsequent offering(s) of DRs in a permissible jurisdiction which is/are made within the overall limit approved pursuant to a unitholders’ resolution in terms of the proposed framework.

6. Based on public feedback, appropriate changes have been made in the proposed framework for issuance of DRs on units of REITs and InvITs. The proposed framework shall be specified by way of Circular and is attached as Annexure – III for information.

7. Proposed amendments to the REIT Regulations and InvIT Regulations

7.1. In order to allow issuance of DRs on units of REITs and InvITs, the following enabling provision is proposed to be inserted in the REIT Regulations and InvIT Regulations:

“Depository Receipts may be issued on units of a REIT / InvIT subject to compliance with these regulations and in such manner as may be specified by the Board.”

8. Proposals to the Board

1. The Board is requested to –

8.1.1. consider and approve the proposals referred in paragraph 7 above along with draft amendment notifications placed at Annexure IV and Annexure V;

8.1.2. authorize the Chairman to carry out suitable amendments to the regulations and to take any other consequential or incidental steps for implementation of the decisions of the Board.

Encls.:

1. Annexure I – Consultation paper dated August 04, 2026

2. Annexure II – Summary of public comments and views of SEBI thereon

3. Annexure III – Draft Framework for Issuance of Depository Receipts on Units of REITs and InvITs

4. Annexure IV – Draft Amendment Notification for REIT Regulations

5. Annexure V – Draft Amendment Notification for InvIT Regulations

Addendum to Board Memorandum – Issuance of Depository Receipts on units of REITs and InvITs

9. Objective

9.1. This addendum proposes certain changes in Annexure III to the Board Memorandum titled “Issuance of Depository Receipts on units of REITs and InvITs”.

10. Permitting Non-Resident Indians to invest in Depository Receipts issued on units of REITs and InvITs

10.1. Paragraph 5(3) of Annexure III to Board Memorandum (Draft Framework for Issuance of Depository Receipts on Units of REITs and InvITs) states as under:

“(3) A DR holder, including its Beneficial Owner(s), shall not be a person resident in India or a Non-Resident Indian (NRI).”

10.2. Public Feedback: The proposed framework presently excludes NRIs from holding Depository Receipts (“DRs”). Non-Resident Indians (NRIs) may also be permitted to invest in DRs listed on recognised stock exchanges in the IFSC, subject to applicable foreign exchange and other regulatory requirements. The Indian diaspora constitutes an important investor constituency for GIFT IFSC and permitting NRIs to access Indian REITs and InvITs through foreign-currency denominated DRs in the IFSC would considerably broaden the investor base for these products.

10.3. SEBI Views: In the draft framework for issuance of DRs on units of REITs and InvITs, investment by NRIs in DRs was not permitted in alignment with the Equity DR Framework of SEBI. However, in view of public feedback, the suggestion to permit investment by NRIs in DRs on units of REITs and InvITs may be accepted as it would offer access to a diverse pool of capital from NRI investors. While NRIs can currently invest in these units directly², permitting them to invest via DRs on the GIFT IFSC will enable them to invest in foreign currency denominated instruments, thereby eliminating currency risk.

Furthermore, the above is aligned with the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (‘NDI Rules’) under which DRs on units of REITs and InvITs can be issued to a person resident outside India (“PROI”). As NRIs are a subset of PROI, NDI Rules permit investment in DRs on units of REIT/InvIT by NRIs.³

10.4. In view of the above, it is proposed to modify paragraph 5(3) of Annexure III to Board Memorandum, as under (deletions shown in strikethrough):

“(3) A DR holder, including its Beneficial Owner(s), shall not be a person resident in India or a Non Resident Indian (NRI). ”

11. Proposal to the Board:

11.1. The Board is requested to –

11.1.1. consider and approve the proposals referred in paragraph 10 above;

11.1.2. authorize the Chairman to carry out suitable amendments to the regulations and to take any other consequential or incidental steps for implementation of the decisions of the Board.

Notes:

1 The list of ‘Permissible Jurisdictions’ and ‘International Exchange(s)’ under the Equity DR Framework covers (i) United States of America – NASDAQ, NYSE (ii) Japan – Tokyo Stock Exchange (iii) South Korea – Korea Exchange Inc. (iv) United Kingdom excluding British Overseas Territories- London Stock Exchange (v) France – Euronext Paris (vi) Germany – Frankfurt Stock Exchange (vii) Canada – Toronto Stock Exchange (viii) International Financial Services Centre in India – India International Exchange, NSE International Exchange

² As per Rule 6(c) read with Schedule VIII of the NDI Rules.

³ As per Rule 6(d) read with Schedule IX of the NDI Rules