SEBI Proposes Relaxed InvIT and REIT Norms Due to Need for Ease of Doing Business

The Securities and Exchange Board of India (SEBI) has proposed comprehensive amendments to the InvIT and REIT Regulations, 2014 to enhance ease of doing business (EoDB) and improve operational flexibility. The proposals address key industry concerns relating to investment structures, liquidity management, and borrowing norms. A major change allows Infrastructure Investment Trusts (InvITs) to continue holding Special Purpose Vehicles (SPVs) even after the expiry or termination of concession agreements, subject to conditions such as exit within a defined timeline and enhanced disclosures. Additionally, REITs and InvITs will be permitted to invest in a broader range of liquid mutual funds by reducing the credit risk threshold from 12 to 10, thereby improving diversification and reducing concentration risk. Privately listed InvITs are also allowed to invest up to 10% in greenfield projects, aligning them with publicly listed InvITs. Further, SEBI clarified that borrowings exceeding 49% of asset value may be used not only for acquisition or development but also for capital expenditure, major maintenance (especially for road assets), and refinancing of debt under specified conditions. These measures collectively aim to streamline compliance, enhance capital efficiency, and provide greater operational clarity while maintaining investor protection and regulatory oversight.

Securities and Exchange Board of India

Measures towards Ease of Doing Business for Infrastructure Investment Trusts and Real Estate Investment Trusts

1. Objective

1.1. This Board Memorandum proposes amendments to the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”) and the SEBI (Real Estate Investment Trusts) Regulations, 2014 (“REIT Regulations”) to introduce measures for Ease of Doing Business (“EODB”) for InvITs and REITs.

2. Background

2.1. SEBI notified InvIT Regulations and REIT Regulations on September 26, 2014. As on February 28, 2026, 5 REITs and 24 InvITs are listed on stock exchanges.

2.2. The cumulative assets under management (Value of assets) for the InvITs and REITs is approximately Rs. 9.5 lakh crores as on February 28, 2026.

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

3. Representation by Industry Associations and Market Participants

3.1. To improve ease of doing business related to activities of InvITs and REITs, Indian REIT Association (“IRA”) and Bharat InvIT Association (“BIA”), collectively referred as “Industry Associations”, and other market participants, have made certain representations for the purpose of ease of doing business.

3.2. The requests received from Industry Associations and market participants were analyzed and proposals in this regard were placed for the deliberation of the HySAC.

3.3. Based on recommendations of the HySAC, SEBI issued a consultation paper titled Consultation paper on Measures towards Ease of Doing Business for REITs and InvITs seeking comments / views / suggestions from the public on the EoDB measures discussed in this Board memorandum. The said consultation paper is enclosed as Annexure – A to this Board Memorandum.

4. Consultation

4.1. A total of 70 comments were received in the consultation process across the eight proposals, from stock exchange, industry associations, InvITs, mutual fund, law firm and investor. A summary of the comments agreeing / partially agreeing / disagreeing to the proposals made in the consultation paper is as under:

Proposal No.	Proposal Description	In number / %	Agree	Partially Agree	Disagree	Total Count
1	Amendment in the definition of SPV to include those companies/LLPs wherein the concession periodhas ended or terminated and infrastructure asset cease to exist in such entity	in number	05	04	01	10
		in %	50%	40%	10%	100%
2	Conditions proposed to be complied by the Investment Manager with regard to such investments	in number	03	05	0	08
		in %	37.5%	62.5%	0%	100%
3	Disclosures proposed in the annual report of the InvIT for such investments	in number	04	04	0	08
		in %	50%	50%	0%	100%
4	Expanding the scope of investments by REITs and InvITs to include liquid mutual fund schemes where the credit risk value is at least 10 and which fall under the Class A-I or Class B-I in the potential risk class matrix	in number	10	0	02	12
		in %	83.3%	0%	16.7%	100%
5	Permitting privately listed InvITs to invest in pure greenfield project up to 10% of its value of InvIT assets in alignment with publicly listed InvITs	in number	07	0	0	07
		in %	100%	0%	0%	100%
6	Permitting borrowings for capital expenditure under Regulation 20(3)(b)(ii) of the InvIT Regulations	in number	08	0	0	08
		in %	100%	0%	0%	100%
7	Permitting borrowings for ‘Major Maintenance expense’ in respect of Road sector under Regulation 20(3)(b)(ii) of the InvIT Regulations	in number	07	0	0	07
		in %	100%	0%	0%	100%
8	Permitting refinance of debt under Regulation 20(3)(b)(ii) of the InvIT Regulations	in number	03	06	01	10
		in %	30%	60%	1%	100%

4.2. The proposals in the consultation paper, feedback received pursuant to public consultation and views of SEBI thereon are summarized at Annexure B. The reference to relevant tables of Annexure B has been made in the proposals mentioned in subsequent paras. Recommendations of the HySAC along with public feedback have been appropriately incorporated in the proposals made to the Board.

5. Permitting InvITs to continue to hold investment in Special Purpose Vehicle post conclusion of concession agreement / such other agreement of similar nature or termination thereof, subject to fulfilment of certain conditions (Annexure B – Table No. 1)

5.1. Extant Regulatory Provision

5.1.1. Regulation 2(1)(zy) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”) defines “Special Purpose Vehicle (SPV)” as under:

“ “SPV” or “special purpose vehicle” means any company or LLP, –

a. in which either the InvIT or the holdco holds or proposes to hold controlling interest and not less than fifty one per cent. of the equity share capital or interest:

Provided that in case of PPP projects where such acquiring or holding is disallowed by government or regulatory provisions under the concession agreement or such other agreement, this clause shall not apply and shall be subject to provisions under proviso to sub-regulation (3) of regulation 12

b. which holds not less than ninety per cent. of its assets directly in infrastructure projects and does not invest in other SPVs; and

c. which is not engaged in any other activity other than activities pertaining to and incidental to the underlying infrastructure projects.”

5.2. Need for review

5.2.1. Regulation 2(1)(zy) of the InvIT Regulations inter-alia requires that 90% of the assets of the SPV shall be invested directly in infrastructure projects and the SPV shall not be engaged in any other activity other than activities pertaining to and incidental to the underlying infrastructure projects.

5.2.2. It has been represented to clarify whether SPV of the InvIT, which ceases to hold any infrastructure project upon the conclusion or termination of concession agreement or such other agreement of similar nature, will still be considered as an ‘SPV’ under the InvIT Regulations.

5.3. Rationale for proposed change

5.3.1. In case of an infrastructure project, upon the conclusion of concession period as per the concession agreement / conclusion of such other agreement of similar nature or termination of such agreement, the underlying infrastructure project in the SPV ceases to exist. Consequently, such SPV may no longer satisfy the qualifying criteria of minimum 90% investment in infrastructure projects which is necessary to maintain its status as a SPV.

5.3.2. However, it has been represented that the InvIT may have to continue to hold investment in such SPV which is not having any infrastructure project on account of the following reasons:

5.3.2.1. Commercially the InvIT may not be able to divest its holding / interest in such SPV immediately on expiry or termination of concession agreement;

5.3.2.2. Practically, after the end of concession rights, the SPV may continue to fulfill its statutory/contractual obligations including income tax assessments, GST assessments, defending litigations against it, defect liability period under relevant concession agreement(s) and therefore, winding up or any corporate restructuring might not be feasible for the said SPV.

5.3.3. To address the above issue and to promote ease of doing business for InvITs, the definition of ‘SPV’ may be amended to facilitate continuation of holding of investment in such SPV by the InvIT, subject to fulfilment of certain conditions (as stated in para 5.4.3 below).

5.3.4. Further, as per the InvIT Regulations, at least 80% of the value of the InvIT assets shall be invested in – (a) completed and revenue generating infrastructure projects for publicly listed InvITs, or (b) in eligible infrastructure projects for privately listed InvITs. The balance 20% can be invested in other permitted investments. Upon conclusion or termination of concession agreement / such other agreement of similar nature, as infrastructure project in such SPV will cease to exist, such SPV cannot be considered under the 80% investment category. Hence, to provide clarity, it is proposed to specify that investment in such SPV shall form part of the balance 20% investment category (i.e. other permitted investments).

5.4. Proposal

5.4.1. It is proposed to insert the following proviso under sub-clause (b) of the definition of ‘SPV’ in Regulation 2(1)(zy) of the InvIT Regulations –

“Provided that, in respect of an SPV holding an infrastructure project, the conclusion or termination of the concession agreement or such other agreement of a similar nature shall not affect its status as an SPV and such an SPV shall continue to be classified as an SPV subject to the fulfillment of such conditions as may be specified by the Board”

5.4.2. It is also proposed to insert the following sub-clause in Regulation 18(5)(b) of the InvIT Regulations (this proposal is based on public feedback discussed in S.No. 1(ii) of Table 1 of Annexure B to the board memorandum) –

“(ix) SPVs for which concession agreement or such other agreement of similar nature has been concluded or terminated and which are held in accordance with proviso to Regulation 2(1)(zy)(b).”

5.4.3. The conditions referred in para 5.4.1 above are proposed to be specified by way of a Circular and are as under:

5.4.3.1. The Investment Manager shall either exit investment in such SPV by way of sale / liquidation / winding-up / merger of such SPV, or acquire any new infrastructure project in such SPV, within one year from –

i. completion/termination of concession agreement or such other agreement of similar nature, or

ii. conclusion of all pending claims/litigations/tax assessments and related appeals, or

iii. completion of defect liability period,

whichever is later.

5.4.3.2. The time taken to obtain relevant statutory or regulatory approvals for exiting investment in such SPV by way of sale / liquidation / winding-up / merger, shall be excluded from the above proposed timeline of one year (this proposal is based on public feedback discussed in S.No. 2(ii) of Table 1 of Annexure B to the board memorandum).

5.4.3.3. Further, till the time investment in such SPV is held by the InvIT, adequate disclosures shall be made in the annual report of the InvIT including the following –

i. InvIT Level: The Investment Manager shall disclose a detailed breakup of the value of investments (gross and net basis) in the SPV(s) wherein the concession agreement or such other agreement of similar nature has ended/terminated.

ii. SPV Level: The Investment Manager shall provide additional disclosures pertaining to each SPV wherein the concession agreement or such other agreement of similar nature has ended/terminated, which shall include the following information:

a. Brief details of the project, date when such agreement ended and status of vesting certificate or any other document issued by the concessioning authority upon successful completion of handover of the project to the said authority.

b. Assets and Liabilities of the SPV (including specific reserves, if any): Provide the nature and amount of respective carrying value of assets and liabilities (including specific reserves, if any) on broad/grouped basis as determined in the annual audited financial statements of the SPV.

c. Contingent Liabilities: Details of Contingent Liabilities of the SPV as set out in its annual audited financial statements.

d. Debt Repayment: Brief details of outstanding debt of the SPV, if any, along with repayment schedule.

e. Whether SPV has sufficient assets to meet its liabilities (including contingent liabilities). If not, how such liabilities are planned to be met.

f. Exit Strategy and Timeline: A clear plan of action detailing
how and when the InvIT intends to exit its investment in the SPV or plans to acquire new infrastructure project, along with the brief details of steps taken so far and expected timeline for completion.

g. Other Material Details: Other material details related to such SPV including details related to pending claims, pending litigations, pending assessments, pending statutory/contractual obligations, balance period of defect liability period, etc.

6. Expanding the scope of investment in liquid mutual fund schemes by REITs and InvITs (Annexure B – Table No. 2)

6.1. Extant Regulatory Provision

6.1.1. Regulation 18(5) of the of the REIT Regulations / InvIT Regulations inter-alia provides that a REIT / InvIT can invest up to twenty percent of the value of its assets in permitted investments. The list of such permitted investments inter-alia include units of liquid mutual funds schemes which meet the criteria specified under Regulation 18(5)(i) of the REIT Regulations / Regulation 18(5)(b)(vii) of the InvIT Regulations, which reads as under –

“units of liquid mutual fund schemes where the credit risk value is at least 12 and which fall under the Class A-I in the potential risk class matrix as specified by the Board”

6.2. Concept of Potential Risk Class (“PRC”) matrix and Credit Risk Value

6.2.1. Paragraph 17.5 of the Master Circular for Mutual Funds dated June 27, 2024 (“MF Master Circular”) inter-alia requires that all the debt mutual funds shall be classified in terms of a PRC matrix consisting of parameters based on maximum interest rate risk (measured by Macaulay Duration (MD) of the scheme) and maximum credit risk (measured by Credit Risk Value (CRV) of the scheme).

6.2.2. The PRC matrix for debt mutual funds is a 3 x 3 matrix with the following syntax for each matrix cell –

Max Credit Risk of scheme →	Class A (CRV >=12)	Class B (CRV >=10)	Class C (CRV <10)
Max Interest Rate Risk of the scheme ↓
Class I: (MD<=1 year)	Relatively Low Interest Rate Risk and Relatively Low Credit Risk	Relatively Low interest rate risk and moderate Credit Risk	Relatively Low interest rate risk and Relatively High Credit Risk
Class II: (MD<=3 years)	Moderate interest rate risk and Relatively Low Credit Risk	Moderate interest rate risk and moderate Credit Risk	Moderate interest rate risk and Relatively High Credit Risk
Class III: Any Macaulay duration	Relatively High interest rate risk and Relatively Low Credit Risk	Relatively High interest rate risk and moderate Credit Risk	Relatively High interest rate risk and Relatively High Credit Risk

6.2.3. Paragraph 17.5.9 of the MF Master Circular inter-alia assigns specific Credit Risk Value for each credit rating of an investment instrument (e.g., a bond or debenture) in a debt fund’s portfolio, ranging from 1 to 13, in the following manner –

6.2.3.1. CRV of >=12 includes securities rated AAA along with G-Sec, State development loans, Repo on Government securities, TREPS and cash;

6.2.3.2. CRV of >=10 includes securities rated AA and above;

6.2.3.3. CRV of <10 includes securities rated below AA, unrated securities and securities below investment grade.

6.3. Need for review

6.3.1. The following representation is received from the Industry Associations –

6.3.1.1. Currently, among the top 15 liquid mutual fund schemes as per AUM, only 2 schemes qualify for a credit risk value of 12 and meet the Class A-I requirement.

6.3.1.2. Liquid mutual funds are primarily concentrated in the B-1 risk class (29 schemes; ₹4.83 lakh crore AUM), with limited presence in A-1 and none in C-1.

6.3.1.3. Across the total 38 liquid mutual fund schemes in India, only 9 schemes qualify under the Class A-I criteria (₹0.52 lakh crore AUM). Of these 9 schemes, 3 schemes have an AUM below ₹1,000 crores, which may pose additional risks due to insufficient scale. Restricting REITs and InvITs to invest in this limited set of schemes can lead to concentration risk, undermining the principles of diversification.

6.3.1.4. Allowing investment in schemes with a credit risk value of 10 or above will enable REITs and InvITs to diversify portfolios more effectively without compromising liquidity and safety.

6.3.2. Hence, to manage risks effectively, the Industry Associations have requested that investments may be permitted in liquid mutual fund schemes with a credit risk value of 10 or above in the PRC matrix, encompassing both Class A-I and Class B-I categories, instead of restricting investments to schemes with a credit risk value of 12 or above.

6.4. Rationale for Proposed Change

6.4.1. Expanding the scope of permitted investments by allowing investment in units of liquid mutual fund schemes which falls under Class B-I category i.e. credit risk value of 10 and above, provides additional investment options for REITs and InvITs in the form of debt securities rated AA and above while still maintaining low to moderate credit risk and also mitigating concentration risk.

6.5. Proposal

6.5.1. In view of the above and to promote ease of doing business for REITs and InvITs, it is proposed to allow REITs and InvITs to invest in units of liquid mutual fund schemes where the credit risk value is 10 or above in the potential risk class matrix, encompassing both Class A-I and Class B-I categories.

6.5.2. Hence, Regulation 18(5)(i) of the REIT Regulations and Regulation 18(5)(b)(vii) of the InvIT Regulations is proposed to be amended as under (insertions in underline and deletions in strike through) –

“units of liquid mutual funds schemes where the credit risk value is at least 12 10 and which fall under the Class A-I or Class B-I in the potential risk class matrix as specified by the Board;”

6.5.3. Further, to align the liquid mutual fund schemes covered in the definition of ‘liquid asset’ with the proposed amendment in investment conditions as mentioned above, the following is proposed (these proposals are based on public feedback discussed in S.No. 1(i) of Table 2 of Annexure B to the board memorandum) –

6.5.3.1. Regulation 2(1)(ta) of the REIT Regulations be amended as under (insertions in underline and deletions in strike through) –

“ “liquid asset” means cash, units of overnight mutual fund schemes, units of liquid mutual fund schemes where credit risk value is at least 1012 and which falls under the Class A-I or Class B-I in the potential risk class matrix as specified by the Board, fixed deposits of scheduled commercial banks, Government Securities, treasury bills, repo on Government Securities and repo on corporate bonds.”

6.5.3.2. Regulation 2(1)(zca) of the InvIT Regulations be amended as under (insertions in underline and deletions in strike through) –

“ “liquid asset” means cash, units of overnight or liquid mutual fund schemes, units of liquid mutual fund schemes where credit risk value is at least 10 and which falls under the Class A-I or Class B-I in the potential risk class matrix as specified by the Board, fixed deposits of scheduled commercial banks, Government Securities, treasury bills, repo on Government Securities and repo on corporate bonds.”

7. Alignment of investment conditions for Privately Listed InvIT with Publicly Listed InvIT in relation to investment in greenfield projects (Annexure B – Table No. 3)

7.1. Extant Regulatory Provision

7.1.1. Regulation 18(4) of the InvIT Regulations inter-alia requires that a privately listed InvIT shall invest at least 80% of the value of its assets in Eligible Infrastructure projects. Eligible Infrastructure project is defined under Regulation 2(1)(o) of the InvIT Regulations and inter-alia includes PPP projects which have not achieved commercial operation date, but have achieved either at least completion of 50% construction or expended at least 50% of the total capital cost (herein after referred as “50-50 test”).

The remaining 20% of the value of InvIT assets may be invested in other investment avenues, such as money market instruments, government securities, liquid mutual funds, etc., as per the proviso to Regulation 18(4) of the InvIT Regulations.

7.1.2. Regulation 18(5)(a) of the InvIT Regulations inter-alia requires that a publicly listed InvIT shall invest at least 80% of the value of its assets in completed and revenue generating infrastructure projects. Regulation 18(5)(b) of the InvIT Regulations inter-alia requires that the balance 20% of the value of InvIT assets may be invested in –

7.1.2.1. under-construction infrastructure projects which includes projects which do not meet the 50-50 test i.e. greenfield projects (with a maximum ceiling of 10% of the value of InvIT assets), and

7.1.2.2. other investment avenues, such as money market instruments, government securities, liquid mutual funds, etc.

7.2. Need for review

7.2.1. Representation is received from market participant that since a publicly listed InvIT is already permitted to invest 10% of its value of assets in greenfield projects, a privately listed InvITs may also be allowed to invest in greenfield projects.

7.3. Rationale for proposed change

7.3.1. It is pertinent to note that investment in units of a publicly listed InvIT is permitted for retail individual investors and the secondary market lot size is kept at 1 unit owing to low execution risk as a publicly listed InvIT is required to invest at least 80% of its assets in completed and revenue generating projects. Still, a limited exposure in under-construction infrastructure projects (which includes greenfield projects) (up to 10% of the value of InvIT assets) is permitted for a publicly listed InvIT.

7.3.2. On the other hand, even though only institutional investors and body corporates are permitted to invest in privately listed InvITs in the primary market and the minimum lot size is kept at Rs. 25 Lakhs, a privately listed InvITs is not permitted to invest in greenfield PPP infrastructure projects as such projects may not meet the criteria of Eligible Infrastructure project (i.e. 50-50 test).

7.3.3. Hence, considering that investment in greenfield infrastructure projects is already permitted for publicly listed InvITs which carry relatively lower project execution risk as compared to privately listed InvITs, it is felt appropriate to permit investment in greenfield infrastructure projects by privately listed InvITs also.

7.4. Proposal

7.4.1. In view of the above and to promote ease of doing business for InvITs, it is proposed to amend proviso to Regulation 18(4) of the InvIT Regulations to facilitate privately listed InvITs to invest up to 10% of the value of InvIT assets in greenfield infrastructure projects (i.e. under-construction infrastructure projects as specified in Regulation 18(5)(b)(i) of the InvIT Regulations).

7.4.2. Accordingly, Regulation 18(4) of the InvIT Regulations be amended as under (insertions in underline and deletions in strike through) –

“In case of InvIT as specified under sub-regulation (2) of regulation 14, the InvIT shall invest not less than eighty per cent of the value of the InvIT assets in eligible infrastructure projects either directly or through holdcos or through SPVs:

Provided that un-invested funds may be invested in instruments as provided under sub clause (ii), (iii), (iv)257[, (v), (vi), (vii) and (viii)] of clause (b) of sub-regulation 5 of Regulation 18.”

8. Expanding the scope of permitted use of fresh borrowings for InvITs where Net Borrowings exceeds 49% of the value of InvIT assets (Annexure B – Table No. 4)

8.1. Extant Regulatory Provision

8.1.1. Regulation 20(3)(b) of the InvIT Regulations requires as under:

“If the aggregate consolidated borrowings and deferred payments of the InvIT, holdco and the SPV(s), net of cash and cash equivalents exceed twenty five per cent. of the value of the InvIT assets, for any further borrowing,–

a. …..

b. above forty nine percent, an InvIT shall –

i. obtain issuer credit rating of the InvIT of “AAA” or equivalent from a credit rating agency registered with the Board;

ii. utilize the funds only for acquisition or development of infrastructure projects;

iii. have a track record of atleast six distributions, in terms of sub-regulation (6) of regulation 18, on a continuous basis, post listing, as at the end of the quarter preceding the date on which the enhanced borrowings are proposed to be made

Provided that for computing six continuous distributions, maximum one distribution per quarter shall be considered and the distributions shall be consistent with the distribution policy disclosed to the unitholders;

iv. obtain the approval of unitholders in the manner specified in sub-regulation (5A) of regulation 22.”

8.2. Need for review

8.2.1. Regulation 20(3)(b)(ii) of the InvIT Regulations require that if the aggregate consolidated borrowings and deferred payments of the InvIT, holdco and the SPV(s), net of cash and cash equivalents (“Net Borrowings”) exceed 49% of the value of the InvIT assets then any further borrowing shall be utilized by the InvIT only for acquisition or development of infrastructure projects.

8.2.2. It has been represented by BIA to clarify whether –

8.2.2.1. obtaining debt for undertaking capital expenditure,

8.2.2.2. obtaining debt for incurring Major Maintenance expense, and

8.2.2.3. refinancing of debt by the InvIT/SPV/Holdco are considered as permitted use of borrowed funds under Regulation 20(3)(b)(ii) of the InvIT Regulations.

8.3. Rationale for the proposed change

8.3.1. Obtaining debt for undertaking capital expenditure

8.3.1.1. It has been represented by BIA that the SPV may incur capital expenditure to enhance asset performance or for capacity augmentation using borrowed funds and has sought clarity on whether such expenditure can be considered as financing the development of infrastructure asset as the same would typically result in enhancing the life and quality of the asset.

8.3.1.2. In this regard, it may be noted that capital expenditure incurred by availing debt to enhance asset performance or for capacity augmentation can be considered as expenditure made towards development of infrastructure project. Hence, it is proposed to clarify that the same is permitted under Regulation 20(3)(b)(ii) of the InvIT Regulations.

8.3.2. Obtaining debt for incurring Major Maintenance expense

8.3.2.1. In this regard, the following representation is made by BIA –

i. Major Maintenance (“MM”) expense refers to periodic expenditure required to be undertaken to enhance the infrastructure asset life or quality and to ensure it continues to meet the specifications of the concession agreements and is distinct from routine operations and maintenance cost of the asset. Further, MM expense is incurred to meet the requirement under the concession agreement.

ii. In case of renewable assets MM expense refers to cost incurred for replacement of modules or inverters. Similarly, in case of airports, MM expense includes the cost of refurbishing/ overlaying the runway. In case of road assets, MM expense refers to cost incurred for resurfacing/ overlaying the pavements, comprehensive repairs to structures, and upgradation and refurbishment of tolling system and other equipment.

iii. MM expense is eligible for capitalization in case of assets like renewable and airport assets held under the InvIT. However, for road sector InvITs, such expenses cannot be capitalized as per the accounting principles as the same does not generate future economic benefits like extended concession periods or increased toll revenue. Due to the same, whether debt taken for undertaking MM expense for road assets can be covered under Regulation 20(3)(b)(ii) as development of infrastructure project or not requires clarity.

8.3.2.2. As represented by BIA, undertaking MM expense is a mandatory requirement under the relevant concession agreement, involve substantial amount which is typically funded via debt and is not eligible for capitalization in respect of road projects vis-à-vis other infrastructure sub-sectors, even though such expenditure may result in enhancing quality and life of the infrastructure project. In cases where MM expense can be capitalized, the same will get covered under Regulation 20(3)(b)(ii) as per the proposal made in para 8.3.1 above.

8.3.2.3. In view of the above and to facilitate ease of doing business for InvITs, it is proposed to specify that debt taken for incurring Major Maintenance expense in respect of Road Projects will be considered as permitted use under Regulation 20(3)(b)(ii) of the InvIT Regulations, wherein “MM expense” and “Road project” shall have the meaning as assigned to these terms under para 8.4.2.2 below.

8.3.3. Refinancing of debt by the InvIT / SPV / Holdco

8.3.3.1. In this regard, the following representation is made by BIA –

i. In the acquisition cycle, refinancing is typically undertaken immediately post the acquisition of SPV / Holdco by the InvIT. The aim of such refinancing is generally to align the debt profile of the acquired SPV / Holdco with that of the InvIT and to provide InvIT’s lenders with the benefit of diversified and pooled cash flows.

ii. The loans at the SPV / Holdco level which are refinanced in the acquisition cycle have originally been availed for development of infrastructure assets and replacing such loans with loans from InvIT (raised from InvIT lenders) upon acquisition of the SPV / Holdco, does not change the end use of the original loan.

iii. Further, in infrastructure sector the financing is made available for a period which is less than the full life of the projects or underlying concessions. Accordingly, such debt instruments / arrangements will need refinancing during the life of the concession or the project.

iv. Refinancing of debt existing at the InvIT, HoldCo or SPV may be undertaken before their respective maturities for various reasons including reduction of cost of debt for the benefit of the unitholders or in compliance with the relevant provisions of the financing documents, if any.

8.3.3.2. Presently, Regulation 20(3)(b)(ii) of the InvIT Regulations inter-alia permit utilization of borrowings for development of infrastructure project, however refinancing of borrowings once availed and utilized for development of infrastructure project is not explicitly permitted. As refinancing will involve repayment of debt availed earlier with fresh borrowings, the same may be permitted to facilitate ease of doing business, subject to certain conditions as mentioned in para 8.4.2.3 below.

8.4. Proposal

8.4.1. It is proposed to amend Regulation 20(3)(b)(ii) of the InvIT Regulations and include an enabling provision therein to empower the Board to specify the purposes for which additional borrowings can be utilized by an InvIT whose Net Borrowings exceed 49% of the value of its assets. Accordingly, Regulation 20(3)(b)(ii) is proposed to be amended as under (insertions in underlined) –

“utilize the funds only for acquisition or development of infrastructure projects or for such other purpose as may be specified by the Board;”

8.4.2. Pursuant to the aforementioned enabling provision, it is proposed to issue a Circular specifying that the following shall be considered as permissible use of borrowing under Regulation 20(3)(b)(ii) of the InvIT Regulations –

8.4.2.1. Capital expenditure made to enhance asset performance or for capacity augmentation;

8.4.2.2. Major maintenance expense in respect of Road Project, wherein –

i. Major maintenance expense shall mean expenditure incurred on maintenance of road project which is not routine maintenance and is in accordance with the obligations and requirements specified in the concession agreement;

ii. Road Project shall mean a project in the ‘Roads and bridges’ infrastructure sub-sector as mentioned in the notification of the Ministry of Finance dated September 19, 2025 and shall include any amendments or additions made thereto.

8.4.2.3. Refinancing of debt, by the InvIT, SPV or Holdco, subject to the following conditions (the proposed conditions have been appropriately streamlined based on public feedback discussed in S.No. 2(i) of Table 4 of Annexure B to the board memorandum):

i. the original debt which is being refinanced was utilized for the purposes permitted under Regulation 20(3)(b)(ii) of the InvIT Regulations;

ii. only the principal portion of debt is refinanced i.e. any accumulated interest or any charges or fees by whatever name called shall not be refinanced.

9. Proposal to the Board:

9.1. The Board is requested to –

9.1.1. consider and approve the proposals as detailed under paragraphs 5.4, 6.5, 7.4 and 8.4 above and the consequent draft amendment notifications placed at Annexure C and Annexure D;

9.1.2. authorize the Chairman to make consequential and incidental changes and take necessary steps to give effect to the decisions of the Board.

Encls.: 1. Annexure A to Board Memorandum

1. Annexure B to Board Memorandum

2. Annexure C to Board Memorandum

3. Annexure D to Board Memorandum

Annexure A to Board Memorandum

‘Consultation paper on Measures towards Ease of Doing Business for REITs and InvITs’ dated February 05, 2026 is available on SEBI Website www.sebi.gov.in under the head “Reports & Statistics” – ”Reports” – ”Reports for Public Comments”

Annexure C

Draft Notification – SEBI (Infrastructure Investment Trusts) Regulations, 2014

Amendment shall be notified after following the due process

Annexure D

Draft Notification – SEBI (Real Estate Investment Trusts) Regulations, 2014

Amendment shall be notified after following the due process