SEBI Proposes Easier Cash Distribution Rules For InvITs Funding Road Maintenance Through Debt

The Securities and Exchange Board of India (SEBI) has proposed allowing Infrastructure Investment Trusts (InvITs) to add back major maintenance expenses for road projects, to the extent they are funded through external debt, while calculating cash available for distribution to investors. The regulator said the move is intended to facilitate ease of doing business.

The proposal stems from representations made by the Bharat InvITs Association (BIA). The industry body argued that major maintenance work on road assets is frequently financed through borrowings.

At present, such expenditure is treated as an operating cost. Under the existing framework, borrowings used to fund major maintenance work are deducted from operational cash flows. This reduces the Net Distributable Cash Flows (NDCF) available for distribution to investors.

SEBI has proposed a change for road projects. It would allow InvITs to add back payments made towards major maintenance while calculating NDCF, but only where those expenses have been financed through external debt.

The proposal comes with a set of conditions. InvITs would need approval from unitholders, while statutory auditors would be required to certify that the expenditure complies with concession requirements. Detailed disclosures on the borrowing, its repayment, and its impact on distributions would also have to be made.

SEBI has sought public comments on the proposal until June 22, 2026.