Reits, InviTs, municipal bonds will see robust growth over the next decade, says Sebi chief

Mumbai: Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch on Friday said real estate investment trusts (REITs), infrastructure investment trusts (InviTs), and municipal bonds are set for robust growth over the next decade.

Buch indicated that this growth could not only match the ₹3.3 trillion raised through equity and the ₹7.3 trillion raised through debt in the last financial year, but could also potentially surpass those figures. She made these remarks at Sebi and National Institute of Securities Markets’s (NISM) ‘Samvad’ symposium during her first public appearance after three months.

“The growth is so substantial that it could exceed the capital pumped in from equity and debt markets,” she said. “If we leverage the assets we have in this country—both existing and those yet to be built—REITs and InviTs could see their capital double over the next decade.” 

She emphasized that this opportunity could be realized through investments from both retail and institutional investors, facilitated by robust investment vehicles such as mutual funds.

Buch also highlighted the significant role of the markets regulator in capital formation, which she described as the organization’s primary purpose. She pointed out that preferential issues and qualified institutional placements (QIPs) often go unnoticed but are crucial in the overall capital-raising process.

“For the last nine months, ₹3.3 trillion has been raised in equity, and with another quarter to go, we anticipate a total of ₹4.3 trillion by year-end,” Buch said.  

Equity, however, represents only a part of the total capital raised. “In FY2024-25, capital formation reached ₹10.7 trillion, with ₹7.3 trillion coming from the primary debt market, a sector that is sometimes underreported.” She said by year-end, the total capital raised—combining both equity and debt—could exceed ₹14 trillion. 

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Buch emphasized the importance of the bond market, which she noted contributes significantly to corporate India’s financing needs. 

“The bond market accounts for almost ₹60 for every ₹100 lent by the banking system to corporate India. It plays a vital role in capital formation,” she explained. While the bond market may not see as much secondary market trading due to a predominance of buy-and-hold investors, it remains a crucial component of India’s financial ecosystem, she added.

Sebi plays a critical facilitating role in capital formation by ensuring that regulations do not hinder, but promote market growth, according to Buch. Technological advancements, including AI-driven projects within Sebi, are helping expedite the processing of public issue applications, she added.

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Addressing concerns about the regulatory environment, Buch said Sebi’s efforts are geared toward easing business processes and reducing compliance burdens. “In the past year, only 21% of Sebi’s circulars focused on investor protection and risk reduction, which can increase compliance costs. The majority—42%—focused on easing business processes, and 21% on making compliance easier,” she explained. 

“Contrary to the perception that regulation increases costs, a large portion of our efforts is aimed at development and ease of doing business.”

Buch highlighted significant initiative launched by finance minister Nirmala Sitharaman in the budget last year for ease of doing business. “We established multiple working groups across market segments to gather suggestions for improving business processes,” she said. “This focus on ease of doing business and market development has become a key priority for Sebi.”

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