SEBI released a consultation paper proposing issuance of Depository Receipts (DRs) against units of Real Estate Investment Trusts (REITs) and publicly listed Infrastructure Investment Trusts (InvITs). This framework would allow foreign investors to access Indian REIT and InvIT units through DRs listed on overseas exchanges. The move aims to deepen capital markets, attract foreign capital into infrastructure and real estate sectors, and expand the investor base for these hybrid securities beyond domestic participants.

Depository Receipts are negotiable instruments issued by a foreign depository bank representing ownership of underlying securities — in this case, REIT and InvIT units — held by a domestic custodian. The concept is borrowed from the ADR/GDR framework used for equities, now proposed for REIT/InvIT units.

REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) are pass-through vehicles regulated by SEBI that pool investor capital to own income-generating real estate or infrastructure assets respectively. They are required to distribute a minimum 90% of net distributable cash flows to unitholders.

By enabling DR issuance against REIT/InvIT units, SEBI seeks to: (1) internationalise these instruments and provide price discovery through global platforms; (2) allow foreign portfolio investors and institutional investors in jurisdictions where direct Indian market access is restricted to participate; (3) increase liquidity and unit demand, potentially compressing yield spreads.

This proposal fits SEBI's broader mandate under Section 11 of the SEBI Act — promoting development of the securities market while protecting investor interests. The consultation paper mechanism itself reflects SEBI's regulatory process before issuing binding circulars. For exam purposes, understand the chain: SEBI consultation paper → SEBI circular → exchange/depository compliance. The examiner frequently tests what specific instruments/acronyms stand for, who promoted key depositories, and the institutional architecture behind such frameworks.