Asset monetisation is the key to unlock infrastructure financing: SEBI Chairman 

The SEBI Chairman, Tuhin Kanta Pandey, highlighted the crucial role of asset monetization in addressing India's infrastructure financing challenges. He emphasised that sectors such as roads, ports, railways, airports, energy, petroleum, and logistics must accelerate their asset monetisation efforts to meet the country's growing infrastructure needs.

While vehicles like Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) have made significant strides in channeling long-term capital into infrastructure, Pandey pointed out that the scale of these instruments still falls short compared to the vast requirements for infrastructure funding in India.

Over the last five years, these financial structures have mobilized over ₹1.5 lakh crore and managed assets worth ₹8.7 lakh crore by FY25. They offer developers the ability to recycle capital by monetizing operational assets, while investors gain steady, yield-generating portfolios. However, more needs to be done to scale these mechanisms to the level necessary to meet India's infrastructure demands.

Pandey also stressed the importance of municipal bonds, which, while still in early stages in India, could play a vital role in funding city-level infrastructure projects. He noted that globally, municipal bonds are a cornerstone of urban financing, and India has already seen 21 municipal bond issuances from cities like Ahmedabad, Chennai, Varanasi, and Rajkot, raising approximately ₹3,134 crore since 2017.

Yet, given the rising demand for water, sanitation, and transport infrastructure in urban areas, this number is modest. He stressed that improving transparency, encouraging regular issuance, and expanding investor participation could significantly boost the potential of municipal bonds as a reliable funding source.

The SEBI Chairman also acknowledged that the current investor base for these instruments is narrow, with institutional investors dominating and retail and foreign investors remaining hesitant. To scale up these efforts, addressing issues such as limited secondary market liquidity and expanding investor participation will be crucial.