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Housing Scheme 2021

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

New Delhi: The Finance Ministry said Thursday that the Finance Bill has proposed amendments that allow Foreign Portfolio Investors (FPI) to enter into debt financing from emerging investment vehicles REIT and InvIT. In the Union’s budget for 2021-2022, Finance Minister Nirmala Sitraman proposed to allow foreign investment institutions to invest in listed debt securities issued by real estate investment funds and real estate investment funds.

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

Amendments were also proposed to the Securitization and Reconstruction of Financial Assets and Real Guarantee Enforcement Act 2002, and the Debt Recovery Against Banks and Financial Institutions Act of 1993.

The amendments will enable co-investment vehicles (specified to include AIF, REIT, InvIT, etc.) to borrow and issue debt securities.

The Ministry of Finance said in a statement that the concerned regulatory authorities will issue the necessary notifications after parliament passes the draft finance bill.

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

While a REIT consists of a portfolio of real commercial assets, of which a significant portion is already leased, InvIT includes a portfolio of infrastructure assets such as roads and power transmission assets.

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