SEBI eases InvIT borrowing norms above 49% leverage ceiling
Synopsis
SEBI has quietly removed a key debt barrier for InvITs — trusts already above the 49% leverage ceiling can now borrow more, but only for capex or mandated road maintenance. The catch: refinancing is capped at principal, with no rolling over of interest or fees. It is a targeted unlock, not a blanket easing, and it lands as India's infrastructure trusts face mounting maintenance bills on ageing assets.
Key Takeaways
SEBI on 15 May 2026 relaxed borrowing rules for InvITs with leverage exceeding 49 per cent of asset value.
Fresh borrowings above the threshold are now permitted for capital expenditure and major road maintenance under concession agreements.
Refinancing of existing debt is allowed for InvITs, SPVs, and holding companies, but restricted to the principal amount only — interest, penalties, and fees cannot be refinanced.
The rules follow amendments to Regulation 20(3)(b)(ii) of the SEBI InvIT Regulations introduced on 17 April 2026 .
The revised norms came into force with immediate effect from the date of the circular.
The Securities and Exchange Board of India (SEBI) on Friday, 15 May 2026, relaxed borrowing norms for Infrastructure Investment Trusts (InvITs) operating above the 49 per cent leverage threshold, widening financing flexibility for infrastructure projects and improving debt access across the sector. The changes take effect immediately, per the regulator's circular.
What the New Rules Allow
Under the revised framework, InvITs that have already crossed the 49 per cent leverage ceiling on asset value will now be permitted to raise fresh borrowings — provided the additional debt is directed toward capital expenditure aimed at enhancing asset performance or expanding project capacity. Previously, breaching this threshold effectively blocked further debt-raising.
The regulator has also opened a specific window for major maintenance expenditure on road infrastructure projects. SEBI defined such expenses as 'non-routine maintenance obligations mandated under concession agreements,' distinguishing them from day-to-day upkeep costs. Road-focused InvITs, which face periodic large-scale repair obligations tied to their concession terms, are expected to be the primary beneficiaries.
Refinancing Rules Tightened
SEBI has simultaneously permitted InvITs, their special purpose vehicles (SPVs), and holding companies to refinance existing debt — but under strict conditions. The regulator has drawn a clear line: refinancing is restricted to the principal portion only. Accumulated interest, penalties, fees, and any other charges cannot be rolled into the new borrowing.
SEBI's circular stated: 'Only the principal portion of debt is refinanced, that is, any accumulated interest or any charges or fees by whatever name called shall not be refinanced.' The restriction is designed to prevent debt restructuring from becoming a vehicle for capitalising unpaid obligations.
Regulatory Background
The revised norms follow amendments introduced to Regulation 20(3)(b)(ii) of the SEBI InvIT Regulations on 17 April 2026, which broadened the permitted use of borrowings beyond the leverage ceiling. Friday's circular operationalises those amendments with granular definitions and implementation conditions, giving InvITs a clearer compliance roadmap.
This is part of a broader regulatory pattern: SEBI has progressively refined the InvIT framework since its introduction, responding to feedback from infrastructure developers and institutional investors seeking greater funding flexibility for long-gestation assets.
Impact on the Sector
India's InvIT market has grown steadily, with several large road and power-sector trusts listed on domestic exchanges. The earlier leverage cap had become a friction point for trusts managing aging assets that require periodic heavy maintenance or those pursuing brownfield expansion. The new rules remove a structural bottleneck without abandoning the leverage guardrail — the cap remains in place for general borrowing; only specific, defined uses now qualify for the exemption.
With the norms effective immediately, InvIT managers are expected to revisit capital planning cycles for the current financial year.
Point of View
But the regulator has carved out defined exemptions for productive uses of debt. That distinction matters: it signals SEBI is willing to accommodate infrastructure's capital-intensive realities without abandoning prudential guardrails. The refinancing restriction on interest and fees is equally telling — it closes a potential loophole where trusts could use refinancing to quietly bury accumulated obligations. What remains to be seen is whether the concession-agreement-linked definition of 'major maintenance' is tight enough to prevent creative interpretation by trust managers under pressure to fund routine work off-balance-sheet.
NationPress
30 Jun 2026
Frequently Asked Questions
What has SEBI changed about InvIT borrowing norms?
SEBI has allowed InvITs that have already exceeded the 49 per cent leverage threshold to raise fresh debt, but only for capital expenditure aimed at improving or expanding assets, or for major road maintenance mandated under concession agreements. The revised rules came into effect immediately on 15 May 2026.
What is the 49 per cent leverage limit for InvITs?
Under SEBI's InvIT regulations, Infrastructure Investment Trusts are generally restricted from borrowing beyond 49 per cent of the value of their assets. The new circular creates specific exemptions above this ceiling for defined capital and maintenance uses, while keeping the general cap in place.
Can InvITs refinance existing debt under the new rules?
Yes, but with strict conditions. SEBI has permitted refinancing of existing debt by InvITs, their special purpose vehicles, and holding companies, subject to the restriction that only the principal portion of the original borrowing can be refinanced. Accumulated interest, penalties, fees, and other charges cannot be included.
Which InvITs benefit most from the relaxation?
Road-focused InvITs are expected to benefit most, as they face significant non-routine maintenance obligations tied to their concession agreements. The new rules specifically address major maintenance expenses on road infrastructure projects, which had previously been difficult to fund once the leverage ceiling was breached.
When do the new SEBI InvIT borrowing rules take effect?
The revised borrowing norms came into force with immediate effect from the date of SEBI's circular, issued on 15 May 2026. The underlying regulatory amendment to Regulation 20(3)(b)(ii) of the SEBI InvIT Regulations was introduced on 17 April 2026.
