The Reserve Bank of India (RBI) issued the All India Financial Institutions Amendment Directions, 2026 on 22 September 2026 to fix how units of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) held by All India Financial Institutions (AIFIs) are valued. The revised valuation norms came into effect immediately. The move coincides with India emerging as Asia’s fourth largest REIT market at $17.7 billion, overtaking Hong Kong for the first time.
What Is RBI Direction on Valuation of InvIT and REIT Units?
The RBI direction amends Chapter VI of the Reserve Bank of India (All India Financial Institutions Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025. The principal directions were issued on 28 November 2025 to govern how All India Financial Institutions classify and value their investment portfolios.
The RBI issued the amendment using its powers under Section 45L of the Reserve Bank of India Act, 1934. The RBI stated that the change was needed to ensure clarity and uniform practices in valuation. The formal title is the Reserve Bank of India (All India Financial Institutions Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026.
The amendment inserts two new provisions, Paragraph 58A for InvITs and Paragraph 58B for REITs. Both provisions follow the same structure. Quoted securities issued by InvITs and REITs, including their traded units, will be valued in the same manner as other quoted securities under the directions, which in practice means valuation at market price. Unquoted units will be valued at Net Asset Value (NAV), which is the per unit value of the trust’s assets after deducting liabilities, as disclosed by the InvIT or REIT itself. Other unquoted instruments issued by these trusts will continue to be valued as per the existing methodology prescribed for such instruments.
What Is AIFI?
AIFI stands for All India Financial Institution. AIFIs are specialised development finance institutions set up to provide long term finance to sectors such as agriculture, housing, small industry, foreign trade and infrastructure. The RBI regulates and supervises AIFIs under Sections 45L and 45N of the Reserve Bank of India Act, 1934.
There are five AIFIs regulated by the RBI (as of September 2026). These are the Export Import Bank of India (EXIM Bank), established in 1982 and headquartered in Mumbai, the National Bank for Agriculture and Rural Development (NABARD), established in 1982 and headquartered in Mumbai, the Small Industries Development Bank of India (SIDBI), established in 1990 and headquartered in Lucknow, the National Housing Bank (NHB), established in 1988 and headquartered in New Delhi, and the National Bank for Financing Infrastructure and Development (NaBFID), set up under the NaBFID Act, 2021 and accorded AIFI status in March 2022.
AIFIs hold large investment portfolios that include government securities, bonds, equities and units of trusts and funds. Correct valuation of investments is important because it determines the book value of assets, provisioning needs and reported profits. The RBI’s classification, valuation and operation norms therefore prescribe how each category of investment must be recorded and revalued.
What Is REIT and How REIT Works in India?
What is REIT. A Real Estate Investment Trust (REIT) is a trust that pools money from many investors and invests it in income generating real estate such as offices, shopping malls and hotels. The trust earns rent from these properties and distributes most of its cash flows to unit holders, while investors can buy and sell REIT units on stock exchanges like shares.
REIT India operations are regulated by the Securities and Exchange Board of India (SEBI). SEBI stands for Securities and Exchange Board of India, established in 1988 and given statutory powers through the SEBI Act, 1992, with headquarters in Mumbai. SEBI notified the SEBI (Real Estate Investment Trusts) Regulations, 2014 to govern registration and functioning of REITs.
A REIT in India works through a four part structure of Sponsor, Trustee, Manager and unit holders. The Sponsor sets up the trust, the Trustee holds assets for the benefit of unit holders, and the Manager takes investment and operational decisions. The REIT must distribute at least 90 percent of its net distributable cash flows to investors, usually every six months. At least 80 percent of the value of a REIT’s assets must be in completed and rent generating properties.
India listed its first REIT, Embassy Office Parks REIT, in April 2019. REIT units are bought through a demat account, and the minimum trading lot has been progressively reduced to widen retail participation. Recent growth has also come from REIT mutual funds in India, REIT exchange traded funds and the new Small and Medium REIT (SM REIT) framework for smaller property portfolios.
What Is InvIT Fund and How InvIT Works?
What is InvIT fund. An Infrastructure Investment Trust (InvIT) is a trust that pools money from investors and invests it in revenue generating infrastructure such as highways, power transmission lines, pipelines, renewable energy plants and warehouses. The InvIT collects user charges or tariffs from these assets and passes most of the income to investors as distributions.
How InvIT works in India follows the same trust model as REITs. InvITs are regulated under the SEBI (Infrastructure Investment Trusts) Regulations, 2014, notified on 26 September 2014. An InvIT has a Sponsor who sets up the trust, a SEBI registered Trustee who holds assets for unit holders, an Investment Manager who decides where to invest, and a Project Manager who operates the underlying projects. InvITs invest either directly in projects or through Special Purpose Vehicles (SPVs), which are separate companies created to own and run a specific project.
InvIT units are listed on the NSE and BSE and can be bought and sold like shares. An InvIT must distribute at least 90 percent of its net distributable cash flows to unit holders. Public InvITs hold completed and operating assets, while private placement InvITs can hold a larger share of under construction projects. Examples of listed InvITs in India include PowerGrid Infrastructure Investment Trust and IRB InvIT Fund, which operate power and road assets.
REIT and InvIT Difference: InvIT vs REIT Which Is Better?
REITs and InvITs share the same pooled trust design and the 90 percent distribution rule, but they differ in the assets they own and the risks they carry. The table below sets out the main points of comparison that investors track when they compare REIT versus InvIT, REIT versus mutual fund or REIT versus physical real estate.
| Basis | REIT | InvIT |
|---|---|---|
| Full form | Real Estate Investment Trust | Infrastructure Investment Trust |
| Main assets | Offices, retail malls, hotels | Roads, power lines, pipelines, renewables |
| Income source | Rent and lease from properties | Tolls, tariffs and transmission charges |
| Regulator | SEBI under REIT Regulations, 2014 | SEBI under InvIT Regulations, 2014 |
| Asset location rule | Properties must be in India, mostly completed | Projects largely in India, can include under construction share |
| Risk profile | Linked to office occupancy and rentals | Linked to traffic, tariffs and concession periods |
InvIT vs REIT which is better depends on the goal of the investor. Office REITs offer relatively stable rental income when occupancy is high, while InvITs from roads or power can offer higher cash distributions but carry project specific risks such as traffic shortfalls or delays. For this reason, many income focused portfolios hold both REIT and InvIT units rather than treating one as a substitute for the other.
Valuation Report and Valuation of Investments Framework
A valuation report states the fair value of an investment on a given date. Valuation of investments as per RBI norms decides whether that value is taken from market prices or from the Net Asset Value declared by the issuer. For AIFIs, this choice directly affects balance sheet strength because overvalued units can hide losses.
Under Paragraph 58A, unquoted InvIT units must be valued at the NAV disclosed by the InvIT. Where an InvIT fails to compute and disclose NAV in the manner and frequency specified under the SEBI InvIT Regulations, 2014, the value of its units will be treated as Re 1 for the purpose of the directions. The same Re 1 treatment applies to InvIT units classified as infrequently traded under those regulations, which means units that are rarely bought or sold and therefore lack a reliable market price.
Under Paragraph 58B, the RBI has laid down identical terms for REITs. Unquoted REIT units must be valued at the NAV disclosed by the REIT. Where a REIT fails to compute and disclose NAV as required under the SEBI REIT Regulations, 2014, or where its units are classified as infrequently traded, the value will also be treated as Re 1.
The Re 1 rule acts as a prudential floor. It prevents institutions from carrying opaque or illiquid units at inflated values and pushes trusts to maintain regular NAV disclosures and trading liquidity.
India REIT Market vs Hong Kong and Market Size
India REIT market size reached $17.7 billion as on 31 March 2026, up 62 percent from $11 billion at the end of 2024. The data comes from the Asia REIT Market Insight 2025-2026 report, which placed India ahead of Hong Kong for the first time and made India Asia’s fourth largest REIT market by value.
Across Asia, 289 active REIT products had a combined market value of $279.4 billion as on 31 March 2026, up 18 percent from $235.8 billion at the end of 2024. India accounted for about 6 percent of that regional total.
| Asia REIT Market (as on 31 March 2026) | Number of REITs | Market Value (billion dollars) | Share |
|---|---|---|---|
| Japan | 58 | 101.4 | 36 percent |
| Singapore | 39 | 76.7 | 27 percent |
| Chinese mainland | 79 | 32.1 | 11 percent |
| India, including two SM REITs | 7 | 17.7 | 6 percent |
| Hong Kong | 11 | 17.4 | 6 percent |
| Total Asia | 289 | 279.4 | 100 percent |
Growth in REIT India listings drove much of the jump. New listings such as Knowledge Realty Trust and Bagmane Prime Office REIT added a combined 53.7 million square feet between June 2025 and June 2026, accounting for about three quarters of new space added to India REITs in that period. As on June 2026, six listed REITs together held about 178 million square feet of office and retail space, with another 36.7 million square feet under construction or planned.
Strong office occupancy, sustained demand from multinational occupiers and expansion by Global Capability Centres (GCCs), which are offshore offices set up by global firms in India, supported rentals and distributions. Tight availability of Grade A offices, which means high quality modern office buildings, also helped occupancy remain high.
Why the New Valuation Norms Matter
The timing of the RBI valuation circular matters because AIFI exposure to InvITs and REITs is set to grow as these markets deepen. A clear rule for quoted and unquoted units reduces differences in how NABARD, SIDBI, EXIM Bank, NHB and NaBFID record the same type of asset.
For financial stability, uniform valuation improves transparency of investment portfolios and makes supervision easier. For the REIT and InvIT market, the insistence on regular NAV disclosure rewards well governed trusts with liquid units, while trusts with poor disclosure face a sharp write down to Re 1 in the books of AIFIs.
For investors tracking REIT share price, InvIT share price, REIT investment returns and InvIT taxation in India, the message is simple. Market liquidity and regular disclosures now directly affect how large domestic institutions value these units.
Key Takeaways
- The RBI issued the AIFI Amendment Directions, 2026 on 22 September 2026, effective immediately, to value InvIT and REIT units.
- New Paragraph 58A for InvITs and Paragraph 58B for REITs require quoted units to be valued as quoted securities and unquoted units at disclosed NAV.
- Unquoted or infrequently traded InvIT and REIT units without proper NAV disclosure will be valued at Re 1 in AIFI books.
- The directions amend the AIFI Investment Portfolio Directions, 2025 dated 28 November 2025 and were issued under Section 45L of the RBI Act, 1934.
- India’s REIT market rose 62 percent to $17.7 billion as on 31 March 2026, overtaking Hong Kong at $17.4 billion to become Asia’s fourth largest REIT market.
