Now Reading: SEBI eases InvIT rules for debt-funded road maintenance costs
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SEBI eases InvIT rules for debt-funded road maintenance costs
SEBI has revised net distributable cash flow (NDCF) rules for infrastructure investment trusts (InvITs), allowing debt-funded major maintenance costs for road projects to be added back when calculating cash available for distribution.…
The Story in Brief
SEBI has revised net distributable cash flow (NDCF) rules for infrastructure investment trusts (InvITs), allowing debt-funded major maintenance costs for road projects to be added back when calculating cash available for distribution. The change, effective from Friday, follows industry requests and a recommendation from SEBI's Hybrid Securities Advisory Committee.
Safeguards include unitholder approval with at least 60 percent votes in favour, mandatory disclosure of project-wise expenses and their impact on future growth, and statutory auditor certification that the expenses comply with concession agreements. SEBI has also mandated separate disclosures for borrowing used for major maintenance, including debt levels and maturity profiles.
The Indian Opinion
The usual narrative pits SEBI's move as a giveaway to infrastructure trusts. But the safeguards tell a different story: unitholder approval with a 60 percent vote threshold, statutory auditor certification, and separate borrowing disclosures. The real test will be whether investors approve these proposals without turning the one-time approval into a blank cheque for repeated debt. If distribution ratios rise sharply without matching improvements in road quality, the regulator may need to review the add-back limits.
Source: thehindubusinessline.com
This story was synthesised by AI from the source linked above.
