Home / Business and Economy / RBI Lets Banks Lend Directly to REITs
RBI Lets Banks Lend Directly to REITs
6 Feb
Summary
- Banks can now lend directly to REITs for the first time.
- This provides REITs with stable, long-term funding options.
- It aims to deepen India's commercial real estate market.
The Reserve Bank of India (RBI) has permitted banks to lend directly to Real Estate Investment Trusts (REITs) for the first time. This policy change, announced by RBI Governor Sanjay Malhotra, is seen as a significant step toward strengthening the financing framework for the sector.
Previously, REITs relied heavily on debt from securities subscribed by institutional investors, typically with shorter tenors of three to five years. This often presented a recurring challenge for long-term funding needs. The Indian REITs Association (IRA) welcomed the decision, highlighting that direct bank lending could lead to longer-term borrowings at the REIT level.
This enhanced access to capital is anticipated to reduce dependence on frequent refinancing. Furthermore, it is expected to support portfolio expansion and contribute to the deeper formalization and institutionalization of India's commercial real estate market. Currently, five publicly listed REITs operate in India.
