Sebi notifies framework for depositary receipts on REITs, InvITs

India's market regulator has unveiled comprehensive guidelines governing the issuance of depositary receipts on REIT and InvIT units, completing a framework designed to enhance foreign capital inflows into the real estate and infrastructure sectors.

The Securities and Exchange Board of India approved the rules following a proposal mooted in August this year. The detailed framework establishes the regulatory structure for depositary receipts—instruments that represent underlying REIT and InvIT units and can be traded internationally—permitting global investors greater access to these domestic investment vehicles.

The move addresses longstanding concerns about capital adequacy in India's real estate and infrastructure sectors. By facilitating international trading of these instruments through established depositary receipt mechanisms, Sebi aims to tap foreign institutional capital that might otherwise remain inaccessible to domestic asset managers.

The notified rules specify operational procedures, eligibility criteria, and investor protections for depositary receipt issuances. Market participants anticipate the framework will encourage REIT and InvIT sponsors to explore international fundraising channels, potentially accelerating infrastructure development and real estate asset monetization across India.

The regulatory clarity comes as both REITs and InvITs have gained traction among domestic investors seeking yields from productive assets. The depositary receipt framework now extends this opportunity to international investors, potentially unlocking significant capital pools for infrastructure and real estate projects nationwide.