Sebi Widens Borrowing Scope For Highly Leveraged InvITs, Allows Funds For Capex And Road Maintenance

The Securities and Exchange Board of India (Sebi) has expanded the permitted use of fresh borrowings for Infrastructure Investment Trusts (InvITs) whose net debt exceeds 49 per cent of asset value, giving these trusts more flexibility to fund expansion projects, major road repairs, and debt refinancing.

In a circular issued on May 15, 2026, Sebi said the revised framework follows amendments made on April 17, 2026 to expand the “permissible use of borrowings above forty-nine per cent”.

What Sebi Has Allowed

Under the revised norms, InvITs can now use additional borrowings for “capital expenditure made to enhance asset performance or for capacity augmentation”, Sebi said. The regulator also permitted such borrowings for “major maintenance expense” related to road projects.

Sebi said, “Major maintenance expense shall mean expenditure incurred on maintenance of road projects which is not routine maintenance and is in accordance with the obligations and requirements specified in the concession agreement.”

The relaxation is expected to help road-focused InvITs manage large periodic repair and rehabilitation expenses, which typically require significant capital outlay.

Refinancing Of Debt Permitted With Conditions

Sebi further allowed refinancing of debt by the InvIT, its special purpose vehicle (SPV), or holding company, subject to certain safeguards.

Sebi said “the original debt which is being refinanced was utilised for the purposes permitted” under the InvIT regulations. The market regulator also clarified that “only the principal portion of debt is refinanced i.e., any accumulated interest or any charges or fees by whatever name called shall not be refinanced.”

Why It Matters

InvITs have become an important route for infrastructure developers to monetise operational assets and raise long-term capital from investors.

However, infrastructure projects often require periodic funding for expansion, maintenance, and liability management. Industry participants have been seeking greater flexibility in the use of borrowings, especially for operational assets generating stable cash flows.

By widening the permitted end-use of debt above the 49 per cent leverage threshold, Sebi aims to provide operational flexibility and at the same time maintain safeguards around borrowing practices.

The circular has come into force with immediate effect.