Finance Bill proposes amendments for enabling FPIs to subscribe to listed debt of REITs, InvITs

New Delhi: The finance ministry on Thursday said the Finance Bill has proposed amendments permitting foreign portfolio investors (FPIs) an entry into debt financing of emerging investment vehicles REITs and InvITs. In the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman proposed to permit FPIs to invest in listed debt securities issued by REITs and InvITs.

In this context, the Government of India as part of the Finance Bill, 2021, has proposed amendments in the Securities Contracts (Regulation) Act, 1956 and Securities and Exchange Board of India Act, 1992.

Amendments have also been proposed in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

The amendments will confer the power to Pooled Investment Vehicles (defined to include AIFs, REITs, InvITs etc) to borrow and issue debt securities.

The necessary notifications would be issued by the concerned regulators after the Finance Bill is passed by Parliament, the finance ministry said in a statement.

REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) are relatively new investment instruments in the Indian context but are popular in global markets.

While a REIT comprises a portfolio of commercial real assets, a major portion of which are already leased out, InvIT comprises a portfolio of infrastructure assets such as highways and power transmission assets.