Real Estate Industry

Sebi amends norms for REITs, InvITs to make them more attractive


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Securities and Exchange Board of India, REITs, InvITs

Mains level: Various initiatives taken for reviving infrastructure growth in India

REITs and InvITs regulations amended

  1. The Securities and Exchange Board of India (Sebi) has amended REITs and InvITs regulations to facilitate the growth of such trusts
  2. This has been done in order to make real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) more attractive

Changed provisions

  1. Both trusts will have to provide a mechanism for resolution of disputes with their shareholders and partners in the holding firm
  2. InvIT will have to file the final placement memorandum with Sebi within 10 working days from date of listing of the units issued therein


Real estate investment trusts (REITs)

  1. Real Estate Investment Trusts or REITs are mutual funds like institutions that enable investments in the real estate sector
  2. This is done by pooling small sums of money from a multitude of individual investors for directly investing in real estate properties so as to return a portion of the income (after deducting expenditures) to unitholders of REITs, who pooled in the money
  3. A REIT in India is allowed to invest mainly in completed and revenue generating assets and other approved investments
  4. REIT will have to distribute the majority of its income among the unit holders
  5. REITs are set up as a trust under the provisions of the Indian Trusts Act, 1882
  6. Like a mutual fund, it has three parties – Trustee, Sponsor(s) and Manager – to avoid any conflict of interest issues
  7. REITs are regulated by the securities market regulator in India- Securities and Exchange Board of India (SEBI)
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