SEBI Calls for Wider Investor Base in Infrastructure Financing to Boost Liquidity

The Securities and Exchange Board of India (SEBI) has called for greater participation from institutional and retail investors in funding the country’s infrastructure projects. SEBI Chairman Tuhin Kanta Pandey said on Thursday that India’s infrastructure financing remains concentrated within a limited pool of investors, raising concerns about liquidity and long-term stability.

Speaking at the NaBFID Annual Infrastructure Conclave in Mumbai, Pandey highlighted the urgent need to diversify the investor base. He urged mutual funds, pension funds, and retail investors to play a bigger role in supporting infrastructure securities. According to him, the current concentration among a few large institutional players has restricted secondary market activity, keeping trading depth and liquidity relatively weak.

Push for Asset Monetisation

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Pandey emphasised the importance of accelerating asset monetisation across multiple sectors, including roads, railways, ports, airports, energy, petroleum, gas, and logistics. While the central government has advanced its monetisation pipeline, he noted that many state governments are still finalising their plans. Instruments such as Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs), securitisation, and public-private partnerships (PPPs) were cited as effective mechanisms to mobilise long-term capital.

Over the past five years, 23 InvITs and five REITs registered with SEBI have together raised nearly ₹1.5 lakh crore, with combined assets under management reaching ₹8.7 lakh crore by the end of FY25. Additionally, infrastructure-focused Category-I Alternative Investment Funds (AIFs) have invested more than ₹7,500 crore as of June 2025.

Role of Municipal Bonds

Pandey also pointed out the role of municipal bonds in diversifying infrastructure financing. Since 2017, 21 bonds have been issued by urban local bodies, raising about ₹3,134 crore. However, progress in this segment has been slow due to weak financial positions of issuers, delays in obtaining regulatory approvals, and concerns around governance.

He underlined that depending heavily on banks and government budgets could lead to concentration risks. Instead, expanding the use of capital markets through instruments such as corporate bonds, InvITs, REITs, and municipal bonds would distribute the financing load more evenly and encourage long-term investor confidence.

Conclusion

India’s infrastructure sector requires vast amounts of sustainable capital to keep pace with economic growth and development goals. SEBI’s push for broader participation from institutional and retail investors aims to improve liquidity, reduce dependence on banks, and strengthen secondary markets. Experts believe that a more diversified funding ecosystem will be critical in supporting asset monetisation and ensuring steady progress in infrastructure development across the country.