SEBI Chair Flags Challenges in Infra Financing, Outlines The Way Forward
Funds raised through municipal bonds, InvITs, and REITs are significant, but fall short against the massive demand, Tuhin Kanta Pandey said.
Securities and Exchange Board of India Chairperson Tuhin Kanta Pandey on Thursday listed a couple of issues with infrastructure financing in India, such as scale, investor depth, and project readiness. He mentioned that these are the problems in fulfilling the country's financing needs.
Speaking at an infrastructure conference organised by NaBFID in Mumbai, Pandey said that while funds raised so far through municipal bonds, Infrastructure Investment Trusts (InvITs), and Real Estate Investment Trusts (REITs) are significant compared to the past, they remain small against the massive demand.
The SEBI chief said that the investor base is still narrow, dominated by institutions with limited retail and foreign investor participation, while weak liquidity in secondary markets further discourages broader involvement. He also pointed to weak balance sheets and delayed clearances as credibility issues for municipal bodies.
To tackle these challenges, Pandey suggested financing from pension and mutual funds, alongside greater retail participation.
He also called for faster asset monetisation, noting that while the central government’s plans have helped InvITs gain traction, most state governments are yet to crystallise their monetisation strategies.
Detailing SEBI’s initiatives, Pandey said the regulator has worked to diversify and deepen financing avenues. In the primary market, infrastructure companies have tapped IPOs, FPOs, rights issues, QIPs, and private placements to raise long-term equity, with sectoral indices delivering annualised returns of 12–14% over the last decade.
InvITs and REITs have mobilised Rs 1.5 lakh crore in the past five years, with assets under management at Rs 8.7 lakh crore as of FY25.
Reforms have included widening the scope of strategic investors, reclassifying REITs as equity for mutual fund investments, launching small and medium REITs, and mandating e-voting and virtual access for unitholder meetings.
Further, Pandey mentioned that Alternative Investment Funds have also emerged as a growing contributor, with commitments rising from Rs 1.1 lakh crore in March 2019 to Rs 14.2 lakh crore by June 2025, including Rs 5.7 lakh crore already invested.
