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Informist, Monday, Mar. 23, 2026

MUMBAI – The Securities and Exchange Board of India on Monday approved measures to ease operational constraints and enhance flexibility for real estate and infrastructure investment trusts, alongside reforms in the alternative investment fund space and steps to widen retail participation in social impact investing.

The regulator approved amendments to the SEBI (Infrastructure Investment Trusts) Regulations, 2014 and SEBI (Real Estate Investment Trusts) Regulations, 2014 to address challenges faced by REITs and InvITs. A key change allows InvITs to continue holding investments in special purpose vehicles even after the underlying infrastructure project has reached the end of its concession period. Under the earlier framework, the conclusion of a concession agreement effectively meant the project ceased to exist, creating pressure on InvITs to exit such investments even when pending claims, litigation, tax assessments or defect liability obligations made immediate divestment impractical.

With the new flexibility, InvITs can retain such investments until these contingencies are resolved. However, they will be required to either exit or acquire a new infrastructure project within one year from the later of the completion of the concession, resolution of disputes, or end of the defect liability period. Time taken for regulatory approvals will be excluded from this timeline, while enhanced disclosures will be mandated in annual reports.

The SEBI also expanded the range of permissible avenues for temporary deployment of funds by REITs and InvITs. These entities will now be allowed to invest in liquid mutual fund schemes with slightly lower credit thresholds—specifically those with a credit risk value of at least 10 and classified under Class A-I or B-I categories. This is expected to provide greater flexibility in treasury management and help mitigate concentration risks, the SEBI said.

Further, privately listed InvITs have been allowed to invest up to 10% of their asset value in under-construction or greenfield infrastructure projects. This brings them closer in line with publicly listed InvITs, which already have similar flexibility, and is expected to encourage capital formation in new infrastructure assets.

SEBI also eased borrowing norms for InvITs with higher leverage. InvITs with leverage between 49% and 70% of asset value will now be permitted to undertake fresh borrowings not just for acquisitions but also for capital expenditure, major maintenance of road assets and refinancing of existing debt—limited to the principal component. The move addresses funding constraints faced by leveraged InvITs and provides greater operational flexibility.

For alternate investment funds, SEBI approved a framework allowing them to retain liquidation proceeds beyond the end of their permissible tenure under certain conditions, such as pending litigation, tax demands or residual operational expenses. Currently, AIFs are required to distribute all proceeds and reduce their bank balance to zero before surrendering their registration, even if unresolved contingencies remain. 

To address this, SEBI has introduced the concept of "inoperative funds," under which such AIFs can retain their registration with significantly reduced compliance obligations until all outstanding issues are resolved. The retained funds will be subject to conditions such as investor consent, evidence of liabilities or reasonable provisioning for expenses, with a maximum retention period of three years in certain cases. The regulator said the move is intended to strike a balance between reducing compliance burdens and maintaining adequate oversight, particularly in cases where fund activity has effectively ceased but administrative or legal obligations remain.

Further, to enhance retail participation in AIFs SEBI approved a sharp reduction in the minimum investment size for individual investors in Social Impact Funds, a category under AIFs. The minimum investment threshold was lowered to INR 1,000 from INR 200,000 earlier.  End

Reported by Kabir Sharma and Anshul Choudhary

Edited by Deepshikha Bhardwaj

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