Overview
- Governor Sanjay Malhotra announced the proposal in the latest policy statement, reversing a long-standing bar on direct bank lending to REITs.
- Banks were previously restricted to lending to REITs’ SPVs, while direct lending to InvITs was permitted after a later policy change.
- The RBI said draft directions enabling bank finance to REITs will be issued shortly for public feedback.
- Existing guidelines for lending to InvITs will be harmonised to match the prudential safeguards planned for REIT exposures.
- Industry analysts expect the change to lower borrowing costs, diversify funding and ease refinancing for India’s five listed REITs, with Budget plans to place CPSE real estate into REITs providing additional momentum.