RBI Proposes Framework for Bank Lending to REITs

Press Release: 2025-2026/2116, Dated: 13.02.2026

The Reserve Bank of India (RBI) has issued draft Amendment Directions for public comments proposing to allow commercial banks to extend finance to Real Estate Investment Trusts (REITs).

The proposal forms part of RBI’s ongoing efforts to align financing norms with evolving capital market structures while maintaining prudential safeguards.

1. Proposal to Allow Financing to REITs

Under the draft amendment:

• Commercial banks may be permitted to extend finance to REITs
• Such financing will be subject to appropriate prudential safeguards, including:

1. 1. Exposure limits
   2. Risk management norms
   3. Board-approved internal policies

This move aims to broaden funding avenues for REITs and support growth of the real estate investment ecosystem.

2. Harmonisation with InvIT Lending Guidelines

The draft also proposes to harmonise existing lending guidelines applicable to Infrastructure Investment Trusts (InvITs) across regulated entities.

2.1 Rationale

• REITs and InvITs share similar structural and risk characteristics
• Harmonised norms will:

1. 1. Ensure regulatory consistency
   2. Simplify compliance for banks and other regulated entities
   3. Facilitate efficient financing of infrastructure and real estate assets

3. Prudential Safeguards and Risk Management

While permitting financing, RBI intends to retain a strong prudential framework through:

• Exposure ceilings
• Risk-based lending policies
• Ongoing monitoring of exposures
• Compliance with existing capital market and real estate exposure norms

4. Public Consultation

RBI has invited comments from stakeholders and the public on the draft amendment directions.

• Last date to submit comments – 6 March 2026

Feedback received will be considered before finalisation of the revised framework.

5. Key Takeaway

The proposed amendment seeks to enable bank financing to REITs within a prudential framework and harmonise lending norms with those applicable to InvITs, thereby supporting development of investment trust structures while maintaining financial stability safeguards.

Click Here To Read The Full Press Release

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