Introduction of REITs as an eligible Financial Instrument under FEMA

parliamentBy Accommodation Times News Services

Introduction of Real Estate Investment Trusts (REITs) as an eligible financial instrument / structure under Foreign Exchange Management Act (FEMA) 1999

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval to allow the Real Estate Investment Trusts (REITs) as an eligible financial instrument / structure under the Foreign Exchange Management Act (FEMA) 1999.

The approval is expected to enable foreign investment inflows into the completed rent yielding real estate projects, which is, as of now, prohibited under the FEMA Regulations.

As a result of this decision, entities registered and regulated under the SEBI (REITs) Regulations 2014 will be able to access foreign investments which as of now are prohibited under the FEMA Regulations. The intent of introducing the instrumentality of REITs is to reduce pressure on the banking system to which the real estate sector looks for funds, free up existing funds of Banks and to encourage construction activities. REITs while attracting long term finance from foreign and domestic sources including NRIs would make available fresh equity to the sector.





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