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SEBI Reclassifies REITs as Equity From January 2026, Sets Transition Rules

The change is meant to draw more long-term capital from mutual funds.

Overview

  • From January 1, 2026, mutual fund and specialised investment fund allocations to REITs will be treated as equity-related investments.
  • Debt schemes will not make new investments in REITs, and holdings as of December 31, 2025 will be grandfathered with AMCs encouraged to divest over time.
  • InvITs retain their hybrid classification under the mutual fund and SIF investment framework.
  • AMFI will update the scrip classification list and AMCs must issue addenda to scheme documents, which will not be deemed fundamental changes.
  • REITs can enter equity indices only after July 1, 2026, and the shift is expected to improve liquidity and institutional participation.