Key approvals in SEBI’s board meeting dated March 23, 2026

The Securities and Exchange Board of India (SEBI) in its 213^th board meeting held on March 23, 2026, considered and approved a slew of regulatory measures towards ease of doing business and investor participation across Alternative Investment Funds (AIFs), Foreign Portfolio Investors (FPIs), the social stock exchange ecosystem, Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). SEBI’s approvals follow recommendations made under various consultation papers issued between January and February 2026. Key approvals announced by SEBI at its board meeting have been discussed below:

1. Approval of proposal for flexibility to AIFs in winding up scheme and surrendering of registration:

• • SEBI has approved proposals to amend the SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations) to address situations in which a scheme or an AIF can retain liquidation proceeds of its portfolio post completion of its tenure. It has also been approved to introduce a framework for tagging certain AIFs as ‘inoperative funds’ with lighter compliance requirements till surrender of their registration certificate.

• • Under the extant regulatory framework, AIFs are required to distribute liquidation proceeds to investors within the permissible fund life and achieve a NIL bank account balance before surrendering their certificate of registration. However, SEBI observed that certain AIFs retain funds beyond this period on account of pending or anticipated tax or litigation demands, or residual operational expenses, and are accordingly unable to satisfy this requirement, thereby constraining them to continue holding the AIF registration and complying with its attendant requirements even when there is no active fund management.

• • In order to address these issues, retention of proceeds by AIFs beyond the permissible fund life will be permitted upon satisfying one of the following conditions:

• • • • demonstrable receipt of a litigation notice or tax/regulatory demand (including show-cause notices, re-assessment notices, or similar official written communications);

• • • • consent of at least 75% of investors by value, for satisfying anticipated liabilities from litigation or tax demand; or

• • • • substantiation of amounts retained for operational expenses through invoices or prior-year comparables, subject to a maximum retention period of three years from end of permissible fund life.

• • AIFs intending to surrender their registration and having one or more such schemes as mentioned above will be tagged as ‘inoperative funds’. The compliance requirements for such funds will be lesser compared to other AIFs, including discontinuation of periodic filings, private placement memorandum (PPM) updation, and performance benchmarking. These measures are expected to reduce the compliance burden on AIFs with no active fund management activity while retaining necessary regulatory oversight.

2. Approval of proposal permitting net settlement of funds for transactions done by FPIs:

• • SEBI approved a proposal to permit net settlement of funds for transactions done by FPIs in the cash market. Currently, FPIs settle their transactions with custodians on a gross basis which results in additional costs for FPIs, including funding costs and foreign exchange slippages.

• • With a view to enhancing operational efficiency and reducing cost of funding for FPIs, it has been decided to permit net settlement of funds for outright transactions done by FPIs in the cash market, i.e., transactions in which there is either a purchase or a sale transaction, but not both, in a security in a settlement cycle.

• • The settlement of securities will continue to be carried out on a gross basis between the FPI and the custodian. Additionally, Securities Transaction Tax (STT) and stamp duty will continue to be levied on delivery basis, as applicable.

• • Since non-outright transactions will continue to be confirmed and settled on a gross basis, concerns relating to potential market influence arising from large FPI positions or speculative trading activity are addressed. Given the necessary system and process modifications required, the proposal will be implemented on or before December 31, 2026.

3. Reduction of minimum value of investment by retail investors in Social Impact Fund of AIF: SEBI approved amendments to the AIF Regulations to reduce the minimum value of investment by individual investors in Social Impact Funds (SIFs) of AIFs to INR 1,000 from the existing INR 2,00,000. This amendment would align the requirement of minimum application size for subscribing to Zero Coupon Zero Principle (ZCZP) Instruments under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations) with the requirement of minimum value of investment by individual investors in SIFs, thereby facilitating wider retail participation on the Social Stock Exchange (SSE). 

4. Approval of ease of doing business measures for REITs and InvITs: With a view to promote ease of doing business and to address practical and operational issues faced by InvITs and REITs, the Board approved amendments to the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations) and the SEBI (Real Estate Investment Trusts) Regulations, 2014 (REIT Regulations) for the following matters:

• • Continued holding of investment in SPVs post conclusion of concession agreement: A Special Purpose Vehicle (SPV) under an InvIT must deploy at least 90% of its assets in infrastructure projects. Upon expiry of the concession agreement, the project in the SPV may effectively cease, but immediate sale or winding up may not be feasible due to pending claims, litigation, tax matters or defect‑liability obligations. InvITs will therefore be permitted to continue holding such SPVs, provided they either exit the investment or acquire a new infrastructure project in the SPV within one year from the later of: a. completion of the concession agreement; b. resolution of pending claims/litigation; or c. expiry of the defect‑liability period. Time taken to obtain necessary statutory or regulatory approvals for exiting the SPV will not be reckoned towards this one‑year period, and InvITs will be required to make appropriate disclosures regarding investment in such SPVs in their annual reports.

• • Expanded investment options for temporary deployment of funds: InvITs and REITs will be allowed to temporarily deploy surplus funds in units of liquid mutual fund schemes with a credit risk value of at least ten, falling under Class A‑I or Class B‑I (i.e., funds holding AA and above rated debt). This relaxes the current position, which restricts such investments only to Class A‑I liquid schemes with a credit risk value of at least 12 (AAA rated debt securities, Government Securities, State Development Loans, Repo on Government Securities, Tri-Party Repo Dealing and Settlement System (TREPS) and cash).

• • Investment in greenfield infrastructure projects by privately listed InvITs: To align the investment norms for privately listed InvITs with publicly listed InvITs with respect to investment in greenfield infrastructure projects, privately listed InvITs will be permitted to invest up to 10% of the value of their assets in greenfield infrastructure projects (i.e., under-construction infrastructure projects as defined in the InvIT Regulations). Presently, privately listed InvITs cannot invest in public private partnership greenfield infrastructure projects.

• • Fresh borrowings for InvITs with leverage exceeding 49%: InvITs with leverage exceeding 49% and up to 70% of the value of their assets will be allowed to avail fresh borrowings for capital expenditure, major maintenance expenses for road projects and refinancing of existing debt which was originally utilized for permitted purposes, subject to the condition that only the principal portion of the debt is refinanced. Currently, such InvITs are allowed to undertake fresh borrowings only for acquisition or development of infrastructure projects.

Conclusion:

SEBI is likely to notify amendment regulations and/or circulars in respect of the above decisions taken at its 213^th board meeting in the coming days.