In a bid to deepen real estate financing, RBI Governor Sanjay Malhotra declared on Friday that commercial banks may lend to REITs, subject to robust prudential norms. This proposal marks a pivotal moment for India’s burgeoning REIT ecosystem.
Listed REITs now benefit from stringent SEBI oversight and governance standards, justifying the policy relaxation. Malhotra noted that the RBI’s assessment confirmed these structures’ readiness for bank involvement.
Historically, REITs and InvITs have served to divest completed projects from bank portfolios, with private capital stepping in. Post-launch restrictions kept banks away from REIT funding, even as InvIT lending was liberalized over time. The new proposal bridges this gap.
‘We’re aligning REIT guidelines with those for InvITs, and drafts will be out for consultation shortly,’ the governor affirmed. This uniformity promises clarity and efficiency for lenders.
Other reforms include doing away with prior nods for branch openings by large gold loan NBFCs (ICCs exceeding 1,000 branches), fostering expansion. Urban co-operative banks also stand to gain from targeted enhancements in lending powers and functioning.
These measures reflect the RBI’s balanced approach: spurring economic activity in infrastructure and housing while embedding safeguards. As consultations proceed, the financial markets brace for transformative impacts on asset funding dynamics.