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The Securities and Exchange Board of India (SEBI) approved a series of regulatory amendments earlier this month aimed at easing compliance requirements for Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and foreign portfolio investors (FPIs). The decisions were cleared during SEBI’s 213th board meeting held in Mumbai. The regulator introduced operational flexibility for AIFs winding up schemes, allowed FPIs to undertake net settlement of cash market transactions, and expanded investment options for REITs and InvITs. The board also approved revised ‘fit and proper person’ norms for intermediaries and adopted conflict-of-interest measures applicable to SEBI officials and board members. Several proposals were framed as ease-of-doing-business measures intended to reduce operational burdens while maintaining regulatory oversight and investor safeguards across India’s capital markets ecosystem.
The Securities and Exchange Board of India (SEBI) approved multiple regulatory amendments affecting Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), foreign portfolio investors (FPIs), and market intermediaries during its 213th board meeting held in Mumbai earlier this month. Advertisement
Among the key decisions, the regulator introduced operational flexibility for AIFs seeking to wind up schemes and surrender registrations. SEBI approved amendments permitting AIFs to retain liquidation proceeds beyond the permissible fund life in cases involving pending litigation, tax demands, or operational expenses, subject to specified conditions. Funds intending to surrender registrations while retaining such schemes would be categorised as ‘inoperative funds’ and subjected to lighter compliance obligations, including exemption from periodic filings and performance benchmarking requirements.
The board also approved a proposal allowing FPIs to undertake net settlement of funds in cash market transactions. At present, FPI transactions are settled on a gross basis, increasing funding costs and foreign exchange-related slippages. Under the revised framework, outright purchase and sale transactions within a settlement cycle may be netted, reducing capital deployment requirements. SEBI stated that securities settlement would continue on a gross basis and statutory levies such as Securities Transaction Tax and stamp duty would remain applicable. The implementation timeline has been set on or before the end of the year.
In measures linked to social finance and retail participation, the regulator reduced the minimum investment threshold for individual investors in Social Impact Funds under AIF regulations from INR 2 lakh to INR 1,000. The move is intended to align participation norms on the Social Stock Exchange with investment requirements applicable to Zero Coupon Zero Principal Instruments.
SEBI further approved amendments aimed at easing operational constraints for REITs and InvITs. InvITs will now be permitted to continue holding investments in special purpose vehicles even after concession agreements expire, particularly in situations involving pending claims, tax matters, or litigation. The regulator also expanded temporary investment avenues by permitting REITs and InvITs to invest in a wider category of liquid mutual fund schemes.
Additional changes include allowing privately listed InvITs to invest up to 10% of asset value in greenfield infrastructure projects and permitting leveraged InvITs to undertake borrowings for capital expenditure, maintenance, and refinancing of existing debt under specified conditions.
Separately, SEBI revised the ‘fit and proper person’ criteria governing intermediaries by removing automatic disqualification solely on the basis of pending criminal complaints or FIRs filed by the regulator. The amendments also broaden conviction-based disqualifications to include economic offences and securities law violations.
The board additionally approved recommendations relating to conflict-of-interest disclosures and investment restrictions applicable to SEBI officials and board members, including stricter disclosure norms, recusal mechanisms, and investment-related safeguards.
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