SEBI & other regulators, developing REITs & InvITs norms for domestic investors

Mumbai : Market regulator SEBI along with other regulators like Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority (PFRDA), is working towards setting up a regulator guidance for investment into Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) by domestic investors.

 The norms is expected to be out soon which will allow domestic institutions to participate. This domestic investors include LIC ( who holds more than 80 per cent share in insurance sector) and other mutual funds.

“As far as those regulator guidance are concerned, it is not just SEBI and RBI, we are sitting down with IRDAI and PFRDA, to evolve these guidance to ensure these entities are allowed to enter. It not much of a entry barrier as far as these entities are concerned. This is what we are working on and it will come through at some point of time,” said Securities Exchange Board of India (SEBI), whole-time member, G Mahalingam, while answering to query at an investors seminar here.

Mahalingam further added, “The norms will come up fast and domestic institutions will start participating.” He added that maybe the industry will have to wait for couple of months or a year’s time, to see the industry become little more active. He reiterated that evolutionary phase takes a little longer but once evolutionary phase pass away, development will be faster.

According to a senior executive whose company is interested in InvITs said, “Indian institutions like Life Insurance Corporation of India (LIC) and many other mutual funds, are not even considering participating in REITs. But there is lot of interest flowing in from foreign institutions (FIs).” This disinterest is due to confusion and certain level of discomfort in the space in terms of regulation.

At present, it is estimated that six REITs will come out with their IPO as soon as they get SEBI clearance. SEBI has already received 4 applications for InvITs as well.Yet another executive believes that in one or two year’s time based on the progress REITs and InvITs makes, there will be more applications pouring in.

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