InvIT

Subject: Economy

Context:

The Cabinet Committee on Economic Affairs has allowed Power Grid Corporation of India Limited (POWERGRID) to undertake monetization of its Tariff Based Competitive Bidding (TBCB) assets through Infrastructure Investment Trust (InvIT).

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 objective of InvITs is to facilitate investment in the infrastructure sector.
• InvITS are like mutual funds in structure. InvITs can be established as a trust and registered with SEBI. An InvIT consists of four elements: 1) Trustee, 2) Sponsor(s), 3) Investment Manager and 4) Project Manager.