Sebi allows UPI payment option to invest in public issues of REITs, InvITs with effect from 1 August

Securities and Exchange Board of India (SEBI) has allowed investment in Infrastructure Investment Trust (InvITs) through UPI mode. The market regulator has also allowed for blocking of investment amount through UPI in Real Estate Investment Trust (REITs). 

- Investors will be able to block investment up to Rs 5 lakh via the UPI mode in their applications
- The regulator has asked to begin this facility from 1 August. The blocked investment amount will be debited from the accounts only after the application is approved.

- Under the UPI facility, the amount is blocked in the accounts which significantly reduces chances of any misuse of the amount.
- InvITs, REITs are investment instruments where the investors have the option to buy units in any projects.  

The capital markets regulator has provided an additional payment option of UPI or unified payments interface mechanism to retail investors to apply in the public issue of REITs and InvITs.

The new framework, aimed at further streamlining the process, will be applicable to public issue of units of Infrastructure Investment Trust (InvIT) and real estate investment trust (REIT), which opens from August 1, the Securities and Exchange Board of India (Sebi) said in two separate circulars.

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The capital markets regulator in January 2019 laid down the process for payment for applications in the public issue of units of these new investment instruments through the facility of Applications Supported by Blocked Amount (ASBA).

Separately, the regulator has decided to reduce the time taken for allotment and listing of units of privately placed InvIT after the closure of the issue to six working days as against the present requirement of 30 working days.

The move is part of Sebi's effort to streamline the process of allotment and listing of units.

REITs and InvITs are relatively new investment instruments in the Indian context but are extremely popular in the global markets.

While a REIT comprises a portfolio of commercial real assets, a major portion of which is already leased out, InvITs comprise a portfolio of infrastructure assets, such as highways and power transmission assets.

After consultation with stakeholders, it has been decided to provide an additional option to individual investors to apply in public issues of units of REITs and InvITs with a facility to block funds through UPI mechanism for application value up to Rs 5 lakh, Sebi said.

The regulator has asked all the entities involved in the process to coordinate with one another to ensure completion of the listing of securities and commencement of trading by T+ 6 (trading plus six) working days.

Further, the merchant banker needs to ensure that the process of additional payment mechanism through UPI is disclosed in the offer document and all the newspapers where the issue advertisement is disclosed.

The details of the investor -- PAN and client ID -- entered on the stock exchange platform at the time of bidding, will be validated by the stock exchange/s with the depositories on a real-time basis.

The regulator asked stock exchanges to update demand data on working days on their websites, which will include all the UPI (accepted/pending) and ASBA bids.

The working day for this purpose will be the working day of the stock exchange on which units of REIT and InvIT are proposed to be listed.

The details of commission and processing fees payable to each intermediary and the timelines for payment need to be disclosed in the offer document.

Inputs from PTI