Q. Consider the following statements:
1.Infrastructure Investment Trusts (InvITs) provide short-term financing for infrastructure projects.
2.Government buildings and social infrastructure projects are the main types of assets held by InvITs.
3.InvITs are required to distribute at least 90% of their net cash flow to investors.
How many of the statements given above are correct?
Answer: A
Notes:
Explanation –
Statements 1 and 2 are incorrect. InvITs provide long-term financing for infrastructure projects, not short-term financing. They are designed to pool money from various investors to invest in income-generating infrastructure assets, which typically have long gestation periods. The main types of assets held by InvITs include roads and highways, power distribution networks, telecom towers, fiber optic networks, and other infrastructure projects.
Statement 3 is correct. InvITs are required to distribute at least 90% of their net distributable cash flow to investors. This distribution is typically done through dividends and interest payouts, providing a consistent income stream to investors.
Source: AIR
