SEBI Proposes Framework For Depository Receipts Linked To REITs, Listed InvITs

The Securities and Exchange Board of India (SEBI) has put forward a proposal that could open another route for overseas investors looking at Indian real estate and infrastructure trusts.

The market regulator wants to permit Depository Receipts (DRs) backed by units of real estate investment trusts (REITs) and publicly listed infrastructure investment trusts (InvITs), something that is currently possible under broader laws but not under SEBI's own operating framework.

To close that gap, SEBI has released a consultation paper outlining how such issues could work. The regulator has indicated that the operating rules would largely follow the mechanism already used for equity-based DRs.

What Has SEBI Proposed?

Under the draft framework, listed REITs and publicly traded InvITs would be allowed to issue DRs against their units. The operational guidelines will be notified separately and are expected to follow the structure already used for equity DRs.

However, privately listed InvITs have not been included in the proposal.

Why Is The Change Being Considered?

Although the Depository Receipts Scheme, 2014, and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, already recognise REIT and InvIT units as eligible securities, SEBI's own regulations do not currently provide a detailed process for issuing DRs.

The regulator believes introducing a dedicated framework would remove this regulatory mismatch and create a clear route for such issuances.

What Are Depository Receipts?

A Depository Receipt is a certificate that represents shares of a company held in another country. In this case, an overseas depository would issue the receipt after the underlying REIT or InvIT units are placed with a custodian in India. Investors abroad would then be able to buy and sell those receipts in foreign currency without directly trading the units in the Indian market.

How Could The Proposal Help?

If the proposal moves ahead, overseas investors would get another way to participate in India's listed REITs and InvITs. Instead of entering the domestic market, they could gain exposure through receipts traded on approved foreign exchanges.

For Indian issuers, the change could widen the pool of potential investors. A broader international presence may also improve visibility for listed trusts and support future capital raising if overseas demand develops over time.

Why Are Privately Listed InvITs Excluded?

The proposal does not extend to privately listed InvITs.

SEBI noted that these investment trusts are subject to stricter eligibility conditions, including a minimum trading lot of ₹25 lakh and initial participation being restricted to institutional investors and body corporates. Once DRs begin trading overseas, enforcing those restrictions would become difficult.

Public Consultation Underway

SEBI has invited comments from market participants on the proposal, including whether DRs should be permitted for REITs and publicly listed InvITs and whether the suggested framework is appropriate.

The regulator has asked stakeholders to submit their views by 25 August 2026.

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