RBI Proposes Bank Loans to Listed REITs: A New Financial Avenue

The Reserve Bank of India plans to allow banks to loan to listed Real Estate Investment Trusts (REITs), setting exposure limits at 49% of asset value. Aimed at harmonizing existing guidelines for REITs and Infrastructure Investment Trusts, this move seeks industry feedback and targets rollout by 2026.

The Reserve Bank of India (RBI) has announced a proposal allowing commercial banks to extend loans to listed Real Estate Investment Trusts (REITs). This initiative marks a shift in financing options for the real estate sector, offering a new investment avenue within regulated parameters.

Under the proposed guidelines, banks may lend to REITs that have completed a minimum of three years of operations and adhere to strict regulatory standards. The draft, which limits banks' exposure to 49% of a REIT's asset value, aims to provide a structured and risk-managed approach to real estate investments.

The RBI has opened a consultation window until March 6, 2026, for feedback on the draft guidelines. The central bank anticipates implementing the new lending provisions from July 1, 2026, aligning them with existing standards for Infrastructure Investment Trusts (InvITs) to ensure parity and consistency in the application.

(With inputs from agencies.)