Regulatory Alerts2025-11-28
Reclassification of Real Estate Investment Trusts as Equity Related Instruments for Mutual Funds and SIFs
The Securities and Exchange Board of India (SEBI) has amended the SEBI (Mutual Funds) Regulations, 1996 to reclassify Real Estate Investment Trusts (REITs) as equity-related instruments to facilitate enhanced participation by Mutual Funds and Specialized Investment Funds. Effective January 1, 2026, new investments in REITs will be treated as equity investments, while existing holdings in debt schemes are grandfathered with an encouragement for Asset Management Companies to divest based on market conditions. Additionally, Asset Management Companies must issue addendums to update scheme documents without triggering fundamental attribute changes, and REITs will be included in equity indices only after a six-month transition period ending July 1, 2026.