The Hindu Business Line : SEBI mulls introduction of real estate investment trusts

Mr M. Damodaran (centre), Chairman, Securities and Exchange Board of India, with Mr K.V. Kamath, Vice-President, CII and MD and CEO, ICICI Bank (right) and Mr Nimesh Kampani, Chairman, JM Financial Group, at the CII Capital Markets Summit held in Mumbai on Wednesday. —

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Mumbai, Nov. 21 Proposals for introduction of real estate investment trusts in India, guidelines for real estate mutual funds, and regulations for trading in securitised debt instruments are on the agenda of the capital markets regulator SEBI for the near-term.

The first set of proposals on Real Estate Investment Trusts (REITs) will shortly be brought out, said Mr Damodaran, Chairman of SEBI, at a CII seminar on capital markets here on Wednesday. (A REIT functions like a fund that invests directly in real estate.)

SEBI is also in the final stages of preparing the norms for the Real Estate Mutual Funds (REMFs). Accounting solutions for valuation of real estate are being worked out both by the Association of Mutual Funds of India and Institute of Chartered Accountants of India, said Mr Damodaran.

“We will make sure that both these products, the REITs and the REMFs are made available to the investor.”

By December this year, SEBI will also bring out its regulations for trading in securitised debt instruments, said the Chairman.

Based on the regulations for fast-track security issuance, 30 large companies are now eligible to avail themselves of this route for raising money from the markets, he said.

Derivative products

SEBI has considered new derivative products to make sure that the Indian market remains an on-shore market rather than an offshore one, he added.

On the derivative products recently announced by SEBI, the regulator has started consultations with stock exchanges to see how quickly these products can be introduced in the market.

There is continuing interest in the Indian stock exchanges from foreign investors, he said. “Even though we banned further issuance of P-notes, this has prompted the foreign investors to invest directly, we have actually gotten flood tides of applications in the last one month, against what many people has assumed,” he added.

Along with the various measures that SEBI has already taken to educate the Indian investor, SEBI will, in the next calendar year, have a nationwide campaign to educate investors. “We will try to provide a better understanding of the various asset classes that the investor could invest in,” he said.

He also said that SEBI is trying to persuade market participants to take the role of self regulatory organisations more seriously.