Circular No. HO/24/13/12(1)2025-IMD-POD-2/I/157/2025; Dated: 28.11.2025
SEBI has revised the investment classification framework for Real Estate Investment Trusts (REITs) to facilitate wider participation by Mutual Funds (MFs) and Specialised Investment Funds (SIFs).
1. Reclassification of REITs
To enable greater institutional exposure to real estate-backed securities, SEBI has reclassified REITs as equity-related instruments.
- This change ensures that investments in REIT units by MFs and SIFs will now fall under the equity allocation category, improving flexibility for fund managers and supporting broader investor participation.
- The revised classification will assist in better portfolio alignment and may allow higher permissible exposure limits for funds that are otherwise restricted under non-equity allocations.
This reclassification will be effective from January 1, 2026.
2. Classification of InvITs Remains Unchanged
SEBI has clarified that Infrastructure Investment Trusts (InvITs) will continue to be treated as hybrid instruments for the purpose of MF and SIF investments.
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This preserves the existing regulatory treatment for InvITs, which combine features of equity and debt.
3. Effective Date
All regulated entities must apply these updated classifications from January 1, 2026, for compliance with investment norms, exposure limits, and portfolio categorisation.
Click Here To Read The Full Circular
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