SEBI Proposes Expanded Operational and Investment Flexibility for REITs and InvITs

The Securities and Exchange Board of India (“SEBI”) has issued a consultation paper on “Measures towards ease of doing business for REITs and InvITs dated February 5, 2026, examining regulatory changes to provide greater investment flexibility for Real Estate Investment Trusts (“REITs”) and Infrastructure Investment Trusts (“InvITs”), while maintaining appropriate prudential safeguards.

SEBI has proposed permitting InvITs to continue holding investments in special purpose vehicles (“SPVs”) even after the expiry or termination of concession agreements, recognizing that such SPVs may need to remain operational to discharge statutory, contractual, tax, or litigation-related obligations.

To operationalize this framework, SEBI proposes amending the definition of SPV, subject to conditions including a defined exit or reinvestment timeline and enhanced disclosures at both the InvIT and SPV levels.

The regulator has further proposed aligning the investment conditions applicable to private InvITs, with those governing public InvITs in relation to greenfield projects, including permitting privately listed InvITs to invest in pure greenfield projects up to 10% of the value of the InvIT assets.

In addition to these operational reforms, SEBI is considering expanding the scope of investment in liquid mutual fund schemes by REITs and InvITs, addressing current eligibility criteria that restrict investment to a narrow class of high-credit funds. Further, SEBI has proposed expanding the permitted use of fresh borrowings by InvITs where net borrowings exceed 49% of asset value, thereby widening the scope of permissible deployment beyond the existing restrictions.

Public comments on the proposed amendments have been invited until February 26, 2026.