In a move that will help garner foreign and domestic investments and provide an additional investment avenue to investors, the board of Securities and Exchange Board of India on Sunday cleared the final guidelines for setting up and regulating real estate and infrastructure investment trusts.
In a meeting addressed by finance minister Arun Jaitley, the board also eased the registration requirement for stock brokers and they will now be required to go for single registration to operate in all stock exchanges as against the need for obtaining multiple certificates from Sebi for operating in different segments under existing rules.
“Thus there will be a simple one time process of registration for operating as a stock broker or clearing member in any stock exchange or clearing corporation in India,” said the statement issued by Sebi after the board meeting.
While Sebi had come out with draft guidelines for Real Estate Investment Trusts in 2013, the finance minister had in his Budget speech stated that the government would provide the necessary tax incentives to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), and laid the road for Sebi to come out with final guidelines.
“These structures would reduce the pressure on the banking system while also making available fresh equity. I am confident these two instruments would attract long-term finance from foreign and domestic sources including the NRIs,” said Jaitley in his Budget speech.
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Talking to reporters after the meeting, Sebi chairman UK Sinha said that the proposals with respect to REITs and infrastructure investment trusts (InvITs) were cleared by the board.
Sebi has said that value of underlying assets and size of initial offer for both REITs and InvITs should be a minimum of Rs 500 crore and Rs 250 crore respectively. But the minimum subscription size has been set at Rs 2 lakh for REITs and
Rs 10 lakh for InvITs.
“The idea is that even if somebody can invest as low as Rs 2 lakh, such person can get the benefit of income from completed projects,” said Sinha.
Infrastructure and construction sectors have a significant role in the economy and the government feels that growth in these sectors is necessary to revive the economy and generate jobs.
Along with foreign investors, domestic institutions like insurers, pension funds and provident funds would also be allowed to invest in these trusts. Through InvITs, the government is aiming to create a new avenue for raising funds to meet infrastructure investment requirements to the tune of Rs 65 lakh crore for the 12th Five Year Plan (2012-17).
The new norms would enable listing and trading of REITs and InvITs on the stock exchange platforms. They are expected to help in channelising domestic investments into real estate and infrastructure sectors, and also attract foreign capital for these segments of the economy.