The Securities and Exchange Board of India (Sebi) has introduced a significant update allowing Infrastructure Investment Trusts (InvITs) to re-include payments towards major maintenance expenses for road projects funded through external debt. According to reports from The Hindu BusinessLine and Rediff Moneynews, this enhancement provides InvITs with increased flexibility to manage upkeep costs efficiently while maintaining cash flow availability for unitholders. The move follows requests from industry and recommendations of SEBI's Hybrid Securities Advisory Committee (HySAC). The revised framework was announced on August 14, 2026 and applies at both the holding company (HoldCo)/special purpose vehicle (SPV) level and the InvIT trust level. As per Moneycontrol, the framework was announced on August 14 and applies at both the holding company (HoldCo)/special purpose vehicle (SPV) level and the InvIT trust level.
Under the revised framework, InvITs will be required to obtain unitholder approval before adding debt-funded maintenance expenses back to net distributable cash flow (NDCF). As reported by The Hindu BusinessLine and Rediff Moneynews, the approval requires at least 60 percent of votes cast in favour and must be obtained for each project where the investment manager proposes to raise borrowing for major maintenance. The approval can be obtained on a one-time basis for debt already availed or proposed to be availed over the entire project lifecycle, or for specific major maintenance expenses. Any additional borrowing beyond the approved proposal will require fresh approval. Under the revised framework, such expenses can be added back to NDCF at both the special purpose vehicle (SPV)/holding company level and the trust level. According to Moneycontrol, the notice to unitholders will have to disclose the projects for which borrowing is proposed, the categories of major maintenance expenses, year-wise and project-wise estimates, and the potential impact on the InvIT's future growth.
Sebi has prescribed several safeguards to ensure proper implementation of the new framework. According to The Hindu BusinessLine and Rediff Moneynews, payments towards major maintenance expenses can be added back to NDCF at both the HoldCo/SPV and InvIT trust levels, but only to the extent they are funded by external borrowing. The road project must fall under the roads and bridges infrastructure sub-sector, while major maintenance will mean expenditure that is not routine maintenance and is in line with the obligations under the concession agreement. A statutory auditor will have to certify that maintenance expenses comply with concession agreement requirements and have been funded through external borrowing, with only such certified payments qualifying for addition back to NDCF. Sebi has clarified that no InvIT or SPV can distribute cash flows by raising external debt, except in specified cases. As per Moneycontrol, the framework clarifies that borrowing for major maintenance will form part of an InvIT's aggregate debt and reduce the leverage headroom available for future growth.
InvITs will be mandated to disclose comprehensive details regarding maintenance debt and expenses. As reported by The Hindu BusinessLine and Rediff Moneynews, the explanatory statement for unitholder meetings must disclose projects for which debt is being raised, categories of major maintenance expenses, estimated project-wise and year-wise expenses, and the possible impact on the InvIT's future growth potential. It must also disclose the present and future impact on distributions to unitholders. Additionally, a statutory auditor will have to certify that maintenance expenses are in line with the concession agreement and have been funded through external borrowings. InvITs will also have to separately disclose borrowing raised and outstanding debt for major maintenance expenses in their financial and periodic reports, with debt maturity profiles separately highlighting such borrowings. According to Moneycontrol, InvITs will have to separately disclose major maintenance-related borrowing in their financial results and annual, half-yearly and quarterly reports, with the Net Borrowing Ratio identifying the amount and percentage of borrowing used for major maintenance, while the NDCF statement will disclose aggregate and outstanding debt related to such expenses.
The revised framework allows such expenses to be added back to net distributable cash flow (NDCF) at both the special purpose vehicle (SPV) and holding company levels. As reported by The Hindu BusinessLine and Rediff Moneynews, InvITs will have to separately disclose borrowing raised and outstanding debt for major maintenance expenses in their financial and periodic reports, with debt maturity profiles separately highlighting such borrowings. Sebi has mandated separate disclosures of borrowing for major maintenance, including the amount and percentage of such debt, outstanding debt and debt maturity profiles. Working capital or overdraft facilities used for treasury or working capital purposes will be excluded if squared off within the quarter. According to Moneycontrol, the change could lead to higher distributions to unitholders in the years before major maintenance expenditure, as debt-funded expenses can be added back while calculating NDCF, though distributions could be lower in subsequent years as the debt is repaid. For the purpose of the framework, a road project refers to a project classified under the 'Roads and bridges' infrastructure sub-sector under the Ministry of Finance notification.
