Sebi Chairman U K Sinha

NEW DELHI, Aug 10- Paving the way for Rs 1 lakh crore fund inflows from foreign and domestic investors, Sebi today cleared new norms for setting up and listing of Real Estate and Infrastructure Investment Trusts. 

The new guidelines would allow trading in units of REITs and InvITs like any other security on stock exchanges. 

The norms were cleared by Sebi’s board at a meeting, which was also addressed by Finance Minister Arun Jaitley, and takes forward the government’s proposals in this regard as outlined in the Union Budget presented last month.

In his budget speech, Jaitley had announced significant tax incentives for these products and the same have been incorporated in the new norms, which are expected to come into force in a month or two after necessary notifications.

However, small investors would have to wait for some time before they are allowed to invest in these new products, as minimum investment amount for REITs has been fixed at Rs 2 lakh and at Rs 10 lakh for InvITs for now, given the complex nature and potential risks associated with them.

The industry and experts welcomed the guidelines and said it would help attract investments to the tune of USD 15-20 billion (over Rs one lakh crore) through such trusts, from foreign as well as domestic investors.

The REITs alone can attract USD 8-10 billion worth funds. Talking to reporters after the board meeting, Sebi Chairman U K Sinha said that these trusts would help in the progress of the real estate and infrastructure sectors. 

The government feels that these new investment avenues would reduce the pressure on the banking system while also making available fresh equity in form of long-term finance from foreign and domestic sources including the NRIs.