Circular No. SEBI/HO/DDHS/DDHS-PoD-2/ I/11700/2026, Dated 15.05.2026
The Securities and Exchange Board of India (SEBI) has issued a circular clarifying the permissible utilisation of fresh borrowings where the net borrowings of an Infrastructure Investment Trust (InvIT) exceed forty-nine percent of the value of InvIT assets under Regulation 20(3)(b)(ii) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014.
The clarification aims to provide regulatory certainty regarding deployment of additional borrowings by highly leveraged InvITs.
1. Applicability of the Clarification
The circular applies in cases where the net borrowings of an InvIT exceed 49% of the value of its assets, which is subject to conditions prescribed under the InvIT Regulations.
SEBI has clarified the purposes for which fresh borrowings may be utilised in such situations.
2. Permitted Use of Fresh Borrowings
SEBI has permitted utilisation of fresh borrowings for the following specified purposes:
2.1 Capital Expenditure for Asset Enhancement
Borrowings may be used towards capital expenditure incurred for:
- Enhancement of asset performance; or
- Capacity augmentation of infrastructure assets
The clarification is intended to support operational improvement and efficiency enhancement of existing infrastructure projects.
2.2 Major Maintenance Expenditure for Road Projects
The circular also permits utilisation of borrowings towards major maintenance expenditure relating to road projects.
SEBI has clarified that “major maintenance expenditure” shall mean:
Non-routine maintenance expenditure undertaken in accordance with obligations specified under the concession agreement.
This clarification seeks to distinguish major maintenance from routine operational expenses.
2.3 Refinancing of Existing Debt
Fresh borrowings may also be utilised for refinancing existing debt subject to specified conditions.
3. Conditions for Refinancing
SEBI has prescribed the following conditions for refinancing of debt:
- The original debt being refinanced must have been utilised for purposes permitted under the InvIT Regulations; and
- Only the principal amount of such debt may be refinanced.
The circular specifically clarifies that refinancing shall not include:
- Accumulated interest
- Fees
- Other charges associated with the original borrowing
4. Objective of the Circular
The clarification aims to facilitate efficient capital management by InvITs while ensuring that additional borrowings are utilised only for productive infrastructure-related purposes.
The circular also seeks to balance operational flexibility for infrastructure projects with prudent leverage management and investor protection under the InvIT regulatory framework.
Click Here To Read The Full Circular
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