Sebi Chairman Urges Greater Participation of IRDAI, PFRDA, and EPFO In REITs and InvITs - Know What It Means For Pensioners and Employees

Sebi Chairman Tuhin Kanta Pandey spoke about increasing the scope of investment in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) at the National Conclave on REITs and InvITs 2025.

Speaking at the event, Pandey highlighted that the market regulator is currently working with major institutions such as the insurance regulatory and development authority of India (Irdai), employees' provident fund organisation (EPFO) and pension fund regulatory and development authority (PFRDA) to increase participation in REITs and InvITs.

"We are actively engaging with institutional investors to deepen their participation in REITs and InvITs. We are coordinating with the Ministry of Finance and several state governments to accelerate public-asset monetisation. We are working with IRDAI, PFRDA, and EPFO to facilitate greater participation from their entities under their purview," Pandey said.

Notably, Pandey’s recent statement can potentially impact not just the Indian retail investor who invests in these assets but also retirees and employees who contribute to the EPFO.

Potential Impact of EPFO, PFRDA and Irdai’s Participation

REITs and InvITs both own and operate real estate and infrastructure assets such as roads, power grids, and office complexes. The managers of these assets distribute a significant portion of their income as dividends to investors.

The participation of the Irdai, PFRDA, and EPFO into REITs and InvITs can bring in a significant influx of capital. EPFO handles a massive retirement corpus for the entire organised sector workforce. The organisation is geared towards providing safety growth for this corpus. Typically, EPFO achieves this goal by investing significantly in debt market instruments (90-91 per cent) and a relatively small investment in equities (9 to 10 per cent).

Participation of the EPFO in InvITs and REITS can give a chance to diversify the portfolio and increase the exposure of the corpus to potential growth in the real estate and infrastructure sectors. Both REITs and InvITs seek to provide returns which are long-term and resilient to short-term volatility, thus the inclusion of these assets can increase the stability and quality of the EPFO's corpus.

For the pensioner, the institutional entry of PFRDA into REITs and InvITs can provide a potentially stable source of dividend-based income. And provide a diversification option alongside assets with similar risk and return profiles.

On the other hand, the participation of large entities like the Irdai and PFRDA can also act as a strong signal for the retail market for instruments like REITs and InvITs. The entry of institutional money via the three organisations can lead to more stable unit prices and better liquidity, allowing existing investors to easily sell their holdings at prices which are fairer.

To conclude, SEBI's initiative to increase participation from Irdai, PFRDA, and EPFO into these assets can direct a significant part of the vast pool comprising savings—pensions, provident funds, and insurance premiums directly into real estate and infrastructural development for the fiscal growth of both the individual and the nation, as these assets aim to not only provide stable returns but also invest in crucial infrastructure as such as roads, bridges and power-grids.