Reserve Bank of India Governor Sanjay Malhotra unveiled a game-changing proposal on Friday, allowing commercial banks to lend to listed Real Estate Investment Trusts (REITs) under prudent measures. Speaking in Mumbai, Malhotra highlighted the evolved regulatory ecosystem as the key enabler for this long-awaited step.
For years, REITs have channeled investor funds into operational real estate assets, reducing the burden on banks’ balance sheets. Introduced alongside InvITs, these trusts were designed to diversify funding sources. Banks could fund InvITs after initial restrictions eased, but REIT lending remained off-limits—until now.
‘The presence of a strong governance framework for listed REITs has prompted us to propose this facility,’ Malhotra explained. The RBI’s review process ensures that lending will mirror safeguards already in place for InvITs, with drafts set for public feedback imminently.
Beyond REITs, the central bank is scrapping prior approval requirements for gold loan NBFCs—specifically ICCs with more than 1,000 branches—to open new outlets. This deregulation is expected to boost their outreach and competitiveness.
The RBI also rolled out proposals targeting urban cooperative banks, aiming to bolster their loan disbursement capabilities and streamline operations. These initiatives collectively aim to inject vitality into key lending segments.
As India’s realty sector eyes expansion, this policy pivot could unlock billions in bank financing, propelling growth while maintaining vigilance against potential vulnerabilities. Stakeholders are optimistic about the ripple effects on investment and development.
