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The Securities and Exchange Board of India (SEBI) has proposed allowing depository receipts to be issued against units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). The proposal aims to provide overseas investors with another avenue to invest in and trade Indian REITs and InvITs through foreign currency-denominated instruments. SEBI has suggested aligning the framework for these depository receipts with the existing rules applicable to equity depository receipts. The regulator has also invited public comments on the proposal until August 25, after which the framework may be finalised.
The Securities and Exchange Board of India (SEBI) has proposed allowing depository receipts to be issued against units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). The move is aimed at expanding investment avenues for overseas investors and attracting additional foreign capital into India's real estate and infrastructure sectors.
Under the proposal, SEBI has suggested that the regulatory framework governing depository receipts issued against REIT and InvIT units should be aligned with the existing rules applicable to equity depository receipts. This is expected to provide consistency in regulations while making the investment process more familiar for global investors.
Depository receipts are foreign currency-denominated financial instruments issued by an overseas institution against securities held with a domestic custodian. These instruments enable investors to buy and sell eligible Indian securities on overseas markets without directly trading on Indian stock exchanges.
Indian-listed REITs and InvITs already permit foreign investments in accordance with the rules prescribed by the Government of India and the Reserve Bank of India (RBI). The proposed framework would provide an additional investment route by allowing overseas investors to trade REIT and InvIT units in foreign currency through depository receipts.
The proposal is part of SEBI's ongoing efforts to strengthen India's investment ecosystem and improve the global accessibility of domestic capital market products. REITs and InvITs have emerged as important investment vehicles in recent years, offering investors access to income-generating real estate and infrastructure assets while providing developers and infrastructure sponsors with an alternative source of long-term capital.
India's REIT market currently includes several listed trusts, while the InvIT segment has also expanded steadily with investments across roads, power transmission, renewable energy, telecom infrastructure and other infrastructure assets. Market participants have increasingly sought measures that improve liquidity and broaden the investor base for these investment vehicles.
SEBI has invited public comments on the proposal until August 25, after which it will review stakeholder feedback before taking a final decision on the regulatory framework.
Source Reuters
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