A Special Purpose Vehicle (SPV) is a separate legal entity created for a specific project or financial purpose, with its own assets, liabilities, and operations.
An SPV is typically formed to isolate financial risk and manage a specific project independently from the parent company. It is widely used in project finance, securitization, and infrastructure projects.
The SPV operates as a distinct entity, ensuring that the project's risks and liabilities do not directly impact the parent company.
In India, SPVs are structured under corporate and financial regulations monitored by bodies like the Reserve Bank of India and other regulatory authorities.
"A company creates an SPV to build a highway, where all project funds, revenues, and liabilities are managed separately."