The Reserve Bank of India (RBI) has implemented revised valuation guidelines for units of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) held by All-India Financial Institutions (AIFIs). These changes, effective immediately, aim to bring greater clarity, uniformity, and remove ambiguity in how these investment instruments are valued across institutions.
The central bank stated that the amendments are incorporated into the RBI (All India Financial Institutions - Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026. This revised framework introduces distinct and standardized treatment for both quoted and unquoted units.
Key Changes for InvITs and REITs
Under the new directives, the RBI has inserted specific provisions (Paragraph 58A for InvITs and Paragraph 58B for REITs) into Chapter VI of its investment portfolio guidelines. The key valuation principles are as follows:
- Quoted Units: Both InvIT and REIT units that are quoted on an exchange will be valued in line with the RBI's existing instructions applicable to other quoted securities.
- Unquoted Units: For unquoted InvIT and REIT units, the valuation will primarily be based on the Net Asset Value (NAV) disclosed by the respective trust.
- Special Cases for Unquoted Units: The RBI has prescribed a default valuation of ₹1 per unit in specific scenarios:
- If an InvIT or REIT fails to calculate and disclose its NAV according to the manner and frequency specified under SEBI (Infrastructure Investment Trusts) Regulations, 2014, or SEBI (Real Estate Investment Trusts) Regulations, 2014, respectively.
- For InvIT or REIT units that are classified as infrequently traded under applicable SEBI regulations.
For any other unquoted instruments issued by InvITs and REITs, AIFIs are directed to continue following the valuation methodologies outlined in the existing RBI directions.
Implications for Financial Institutions
These revisions, issued under the powers conferred by Section 45L of the Reserve Bank of India Act, 1934, are considered necessary in the public interest. The new framework establishes a more transparent and consistent valuation mechanism for AIFIs that hold InvIT and REIT units, particularly addressing situations where market quotations are unavailable or where the trusts do not adhere to prescribed NAV disclosure requirements. This move is expected to enhance the reliability of financial reporting and risk assessment within the financial sector.