Q. Consider the following statements with respect to the Infrastructure Investment Trust (InvIT):
1.It is the only debt financing mechanism for large-scale government infrastructure projects.
2.InvIT are regulated by the National Investment and Infrastructure Fund (NIIF).
3.Investors receive a guaranteed fixed returns when investing through InvITs.
How many of the statements given above are correct?
Explanation –
Statements 1, 2 and 3 are incorrect. Infrastructure Investment Trusts (InvITs) are not solely debt financing mechanisms. They are investment schemes similar to mutual funds that pool money from various investors, including both debt and equity components, to finance infrastructure projects, providing a diversified investment portfolio. InvITs are regulated by the Securities and Exchange Board of India (SEBI). Investors in InvITs do not receive guaranteed fixed returns. The returns are based on the performance of the underlying infrastructure projects, which may be subject to various market, regulatory, and operational risks. Investors may receive periodic distributions of cash flows generated by the underlying infrastructure assets, but these distributions are not guaranteed and can fluctuate over time.
Source: The Hindu
