Infrastructure Investment trust (InvIT)
- June 13, 2020
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Subject: Economy
Context:
National Highways Authority of India (NHAI) is setting up an infrastructure investment trust (InvIT) to attract big-ticket funds; this is first by a government agency.
Concept:
- An Infrastructure Investment Trust (InvITs) is like a mutual fund, which enables direct investment of small amounts of money from possible individual/institutional investors in infrastructure to earn a small portion of the income as return.
- InvITs work like mutual funds or real estate investment trusts (REITs) in features.
- InvITs can be treated as the modified version of REITs designed to suit the specific circumstances of the infrastructure sector.
- SEBI notified the SEBI (Infrastructure Investment Trusts) Regulations, 2014 providing for registration and regulation of InvITs in India.
- The purpose of InvITs is to enable Infrastructure Companies to repay their debt obligation quickly and effectively. Since infrastructure-oriented projects tend to take time to generate substantial cash flow, InvITs come in handy for paying off loan interests and other expenses conveniently.