Permitted Use of Fresh Borrowings by InvITs Where Net Borrowings Exceed 49% of Asset Value

SEBI has issued a circular¹ specifying the permissible uses of fresh borrowings by Infrastructure Investment Trusts (“InvITs”) where total net borrowings exceed 49% of the value of InvIT assets. The circular follows the amendment to Regulation 20(3)(b)(ii) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014 empowering SEBI to prescribe the end-use of such borrowings.

Under the revised framework, borrowings above the 49% threshold may be utilized for capital expenditure aimed at enhancing asset performance or capacity augmentation. Such borrowings may also be used for major, non-routine maintenance expenditure relating to Road Projects falling within the “Roads and Bridges” sub-sector, provided such expenditure is aligned with the applicable concession agreement.

The circular further permits refinancing of existing debt of the InvIT, its Holdco, or SPV, subject to the condition that the original borrowing was incurred for permissible purposes and that refinancing is restricted to the principal outstanding amount, excluding accrued interest, fees, penalties, or other charges.

Conclusion

The circular provides much-needed clarity on the deployment of borrowings by highly leveraged InvITs and balances operational flexibility with investor protection and prudent leverage management.

Last Updated on 24 June, 2026