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SEBI updates the framework for calculating Net Distributable Cash Flows (NDCF) for Infrastructure Investment Trusts (InvITs). InvITs may now add back payments for major maintenance expenses of road projects to the extent these expenses are funded by external debt. This change applies to calculations at both the HoldCo/SPV level and the Trust level. InvITs must obtain unitholder approval before adding back these expenses. The Investment Manager must provide detailed disclosures regarding the debt, project impact, and funding alternatives in the notice for the unitholder meeting. Statutory auditors must certify that the expenses align with concession agreements and are funded by external borrowings. InvITs must also include specific disclosures regarding this debt in their financial reports.
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[Image omitted. See the official document.]
CIRCULAR
HO/17/11/17(5)2026-DDHS-POD2/I/18791/2026
August 14, 2026
To,
All Infrastructure Investment Trusts (“InvITs”) All Parties to InvITs All Depositories All Recognized Stock Exchanges
Madam / Sir,
Sub: Framework for Calculation of Net Distributable Cash Flows for InvITs
Section F (Para 3.19) titled “Framework for calculation of Net Distributable Cash Flows (NDCFs)” of Chapter 3 of Master Circular for Infrastructure Investment Trusts (InvITs) dated July 11, 2025, inter-alia provides the “Framework for computation of NDCF for SPV/Holdco and InvIT”.
SEBI is in receipt of request from industry association to review the aforementioned framework for computation of NDCF, to allow addition of debt funded major maintenance expenses for the purpose of calculation of NDCF. Based on the same and recommendations of the Hybrid Securities Advisory Committee (“HySAC”) and public consultation pursuant to the same, the following changes are made in Section F (Para 3.19) titled “Framework for calculation of Net Distributable Cash Flows (NDCFs)” of Chapter 3 of Master Circular for InvITs:
2.1. Under Para 3.19 of Chapter 3 of Master Circular for Infrastructure Investment Trusts dated July 11, 2025, in Table S.No. (I.) titled ‘Computation of Net Distributable Cash Flow at HoldCo/SPV Level’, a new line item shall be added to allow add back of payments made towards major maintenance expense for road projects to the extent funded by external debt. Accordingly, the framework for computation of NDCF at HoldCo/SPV level as provided in the Master circular shall change as follows (insertion highlighted in red color):
“ (I.) Computation of Net Distributable Cash Flow at HoldCo/ SPV level:
| Particulars |
|---|
| Cash flow from operating activities as per Cash Flow Statement of HoldCo/ SPV |
| (+).. |
| (+).. |
| (+) Proceeds from sale of infrastructure investments, infrastructure assets or sale of shares of SPVs or Investment Entity not distributed pursuant to an earlier plan to re-invest as per Regulation 18(7) of InvIT Regulations or any other relevant provisions of the InvIT Regulations, if such proceeds are not intended to be invested subsequently……… |
| (+) Payments made towards major maintenance expense for road projects to the extent funded by external borrowing subject to Note 12 below |
| (-)……… |
| (-)……… |
| NDCF for HoldCo/SPV’s |
| …………………” |
2.2. Under Para 3.19 of Chapter 3 of Master Circular for Infrastructure Investment Trusts dated July 11, 2025, in Table S.No. (II.) titled ‘Computation of Net Distributable Cash Flow at Trust Level’, a new line item shall be added to allow add back of payments made towards major maintenance expense for road projects to the extent funded by external debt. Accordingly, the framework for computation of NDCF at Trust level as provided in the Master circular shall change as follows (insertion highlighted in red color):
(II.) Computation of Net Distributable Cash Flow at Trust level:
| Particulars |
|---|
| Cashflows from operating activities of the Trust |
| (+).. |
| (+).. |
| (+) Proceeds from sale of infrastructure investments, infrastructure assets or sale of shares of SPVs/Hold Co or Investment Entity not distributed pursuant to an earlier plan to re-invest as per Regulation 18(7) of InvIT Regulations or any other relevant provisions of the InvIT Regulations, if such proceeds are not intended to be invested subsequently……… |
| (+) Payments made towards major maintenance expense for road projects to the extent funded by external borrowing subject to Note 12 below |
| (-)……… |
| (-)……… |
| NDCF at Trust Level |
| …………………” |
2.3. Under Para 3.19 of Chapter 3 of Master Circular for Infrastructure Investment Trusts dated July 11, 2025, in S. No. (III.) titled ‘Notes/ Other Rules’, Note No. 4 and 6 shall be substituted with the following –
(III.) Notes/Other Rules
“..……..
Surplus cash available in InvITs/HoldCos/SPVs due to: (i) 10% of NDCF withheld in line with the Regulations in any earlier year or half year or (ii) Such surplus being available in a new HoldCo/SPV on acquisition of suchHoldCo/SPV by InvITor (iii) Any other reason, excluding if such surplus cash is available due to any debt raise. However, surplus cash available on account of payments made for Major Maintenance expenditure for road projects to the extent funded by external debt may be distributed subject to conditions specified in Note 12 and adequate disclosures in this regard.
…
Further, it is expressly provided that no Trust or SPVs can distribute any cash flows by obtaining external debt, except to the extent clarified in note 2, 7 and 12 (this will exclude any working capital / OD facilities obtained by Trust/ SPVs as part of Treasury management / working capital purposes as long as they are squared off within the quarter).”
2.4. Under Para 3.19 of Chapter 3 of Master Circular for Infrastructure Investment Trusts dated July 11, 2025, in S. No. (III.) titled ‘Notes/ Other Rules’, following shall be added as Note No. 12 -
(III.) Notes/Other Rules
………….
11……….
(i) Road Project shall mean a project in the ‘Roads and bridges’ infrastructure sub-sector as mentioned in the notification of the Ministry of Finance dated September 19, 2025 and shall include any amendments or additions made thereto.
(ii) Major maintenance expense shall mean expenditure incurred on maintenance of road project which is not routine maintenance and is in accordance with the obligations and requirements specified in the concession agreement.
(iii) Unitholder approval pursuant to Regulation 22(5) of the InvIT Regulations (i.e. approval from unitholders shall be required where votes cast in favor of the resolution shall be at least sixty per cent of total votes cast for the resolution) shall be undertaken before adding back payments made for Major maintenance expense for road projects to the extent funded by external borrowing. Such approval shall be undertaken for each Project (whether held at InvIT level or at SPV/HoldCo level) with respect to which the investment manager proposes to raise borrowing for major maintenance payments.
(iv) Explanatory Statement to the notice for convening such unitholder meeting, inter-alia, shall also disclose the following –
a. Names and details of the projects/SPVs/ Holdcos for which the debt for Major Maintenance expense is proposed to be raised or is already raised. The Major Maintenance borrowing may be raised at Trust level or SPV/ HoldCo level.
b. Category of all expenses which will be considered as Major Maintenance expenses.
c. Indicative Year wise and Project wise estimates of the Major Maintenance expenses for which borrowing is proposed to be raised which may have to be incurred as per the latest available valuation report
d. Possible Impact on future growth potential of InvIT due to use of borrowing for Major Maintenance expenses. The following disclaimer may be considered by the InvITs in this regard:
" Major Maintenance Debt is similar to loan taken for capital expenditure, however Major Maintenance expense cannot be capitalized as per accounting principles. Major Maintenance debt shall form part of the aggregate borrowing of the InvIT and would result in reduction in the leverage head room available in future years to fund future growth. On the other hand, this will result in higher cash flow available for distribution or other uses since no cash is set aside for Major Maintenance."
e. Present impact and Future impact on distribution to unitholders (Wherever applicable, the following shall be disclosed -
