India's markets regulator on Thursday proposed allowing Infrastructure Investment Trusts to retain projects beyond their initial operating tenure, as part of a package of rule changes aimed at boosting capital flows into the investment vehicles.
Under current rules, InvITs must stop holding infrastructure projects once the tenure granted under the concession agreement ends.
The Securities and Exchange Board of India also proposed widening the range of liquid mutual fund schemes that Real Estate Investment Trusts and InvITs can invest in, focusing on schemes with lower credit risk to protect investor interests.
"We are examining a proposal to expand the pool of liquid mutual fund schemes, in which REITs and InvITs can invest, while safeguarding investor interests," Tuhin Kanta Pandey, chairman of SEBI, had said in a speech in November last year.
The regulator also proposed easing borrowing restrictions for InvITs. Currently, when net borrowing exceeds 49% of asset value, fresh borrowings are permitted only for acquiring or developing assets. The new proposal would allow such borrowings for capital expenditure and major maintenance as well.
SEBI said in August that the current definition of strategic investors was too narrow and excluded public financial institutions, insurance companies, and provident and pension funds, limiting the trusts' ability to attract capital.
SEBI has sought comments on the proposals by February 26.