Introduction
Regulation 20 of Infrastructure Investment trust regulations 2014 (InvIT regulations 2014) regulates borrowing of funds by InvIT. Sub-reg (3)(b)(ii) of reg 20 prescribed that the funds borrowed in excess of 49% of total InvIT assets should be used only for acquisition or development of infrastructure projects. However, through an amendment dated 17th April 2026, SEBI modified the language of the said sub-clause and as a result, SEBI was empowered to prescribe additional purposes for which the borrowed funds above 49% can be used.
In exercise of this power, SEBI has prescribed certain additional end uses of the borrowed funds in excess of 49% through a circular dated 15th May 2026. In this write up we shall try to understand these end uses
Specified end uses
SEBI through Circular dated 15th May 2026 has specified 2 purposes for which borrowed funds can be used. They are as under.
1. Capital expenditure made to enhance asset performance or for capacity augmentation;
2. Major maintenance expense in respect of Road Project,
3. Refinancing of debt, by the InvIT, SPV or Holdco, subject to the following conditions:
(a)the original debt which is being refinanced was utilized for the purposes permitted under Regulation 20(3)(b)(ii) of the InvIT Regulations;
(b)only the principal portion of debt is refinanced i.e. any accumulated interest or any charges or fees by whatever name called shall not be refinanced.
Other then this, the circular also clarifies the meaning of major maintenance expense and road project in following words.
“Major maintenance expense shall mean expenditure incurred on maintenance of road project which is not routine maintenance and is in accordance with the obligations and requirements specified in the concession agreement;”
“Road Project shall mean a project in the ‘Roads and bridges’ infrastructure sub-sector as mentioned in the notification of the Ministry of Finance dated September 19, 2025 and shall include any amendments or additions made thereto.
Effective date of amendment
The amendment dated 17th April 2026 modifying reg 20(3)(b)(ii) has already become effective and the circular also clarifies that it shall come in to effect immediately hence the funds borrowed hence forth by InvITs can be used for undertaking major maintenance of road projects or refinance of existing borrowing etc.
Conclusion
The amendment and the subsequent circular are likely to provide greater operational and financial flexibility to InvITs, especially in sectors such as roads where periodic major maintenance is an important part of asset management. The express recognition of refinancing as a permitted end use may also help InvITs in better debt management and reduction of financing costs while conditions prescribed for refinancing ensure that the additional flexibility is not misused for purposes beyond those originally permitted under the regulations. Overall, the changes indicate a gradual expansion of the permitted utilization framework for InvIT borrowings while continuing to retain regulatory safeguards on the use of leveraged funds.