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SEBI issues notification on rules for index providers and SM REITs, know complete details

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SEBI issues notification on rules for index providers and SM REITs, know complete details

SEBI Rules for SM REITs: Market regulator Securities and Exchange Board of India (Sebi) has issued a notification regarding rules for index providers and small and medium real estate investment trusts (REITs).

SEBI Rules for SM REITs: Market regulator Securities and Exchange Board of India (Sebi) has issued a notification regarding rules for index providers and small and medium real estate investment trusts (REITs). The regulator notified the Sebi Index Providers Regulations on March 8, almost a year after its board first approved the norms. SEBI has made it mandatory for registration of index providers managing important indices based on listed securities in India. These regulations aim to increase transparency, sustainability and accessibility in the real estate investment sector.

Let us tell you that global index providers may not need to register with SEBI unless their indices are used as benchmarks by domestic asset managers with large corpus.

SM REITs for fractional ownership in real estate

The market regulator has also amended the rules on real estate investment trusts (REITs) to facilitate small and medium REITs. Fractional ownership platforms in real estate have been permitted to issue these REITs. With the changes, both residential and commercial properties with a minimum value of Rs 50 crore can be included in SM REITs. Till now, only large-scale commercial properties could be part of a REIT.

Important things-

  • Minimum size must be ₹50 crore.
  • Minimum 200 investors
  • Minimum subscription amount ₹10 lakh
  • Mandate that at least 95% of the income-generating assets held in a Special Purpose Vehicle (SPV) should be met.
  • Investment managers setting up REITs must have a minimum net asset of ₹20 crore.
  • Investment managers are required to hold a minimum of 5% of REITs units without leverage for 2 years and 15% if leverage is involved.
  • The maximum borrowing limit has been fixed at 49%.
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