Reserve Bank of India (RBI) issues final norms for bank lending to REITs and InvITs

Key facts

• The Reserve Bank of India (RBI) has issued final amendments permitting commercial banks to lend to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
• Overseas branches of Indian banks may participate in REIT financing under syndication arrangements, subject to a 20 per cent contribution cap and a 150 per cent risk weight.
• Eligibility for lending requires that at least 80 per cent of underlying assets generate positive cash flows for at least one year.
• The RBI rejected financing for land acquisition and under-construction assets and barred small finance banks from extending acquisition finance facilities to InvITs.
• Aggregate bank exposure to REITs, InvITs, and their underlying entities is capped at 49 per cent of asset value, with exposures shifting to the capital charge framework on April 1, 2027.