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Informist, Monday, Jun. 1, 2026

--SEBI issues paper on distributable cash flows calculation for InvITs

--SEBI mulls OK for InvITs to add debt-funded maintenance costs to cash flows

MUMBAI – The Securities and Exchange Board of India issued a consultation paper Monday on the calculation of net distributable cash flow for infrastructure investment trusts based on a request from InvITs lobby group, Bharat InvITs Association. The lobby group had approached SEBI with regard to the treatment of debt availed by InvITs for incurring major maintenance expenses of road projects while calculating the distributable cash flow.

The SEBI paper has proposed that payments for major maintenance expenses of road projects of InvITs that are specifically funded by external borrowings be allowed to be added back for the purpose of computation of net distributable cash flows. 

SEBI's current rules specifically prohibit InvITs from using borrowed money for distributions to unitholders. The InvIT lobby group wants SEBI to remove this prohibition because it discourages "the developers from monetising their projects through InvITs." This, according to the group, happens due to average cost of capital for special purpose vehicle acquisitions going up if InvITs fund major maintenance expenses of road projects through debt.

SEBI has invited comments from the public and market participants on the paper's proposal by Jun. 22. It also wants feedback on whether existing InvITs provide adequate and appropriate safeguards with regard to the implications if the proposal is accepted.  End

Reported by Rajesh Gajra

Edited by Avishek Dutta

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