The Reserve Bank of India has inserted paragraphs 61A and 61B into Chapter IV (Risk Weighted Assets) of the Master Direction on Prudential Norms for Capital Adequacy, prescribing explicit risk weights for bank exposures to Real Estate Investment Trusts (REITs).
What Changed
Effective October 1, 2026 (or earlier if a bank adopts the RBI (Commercial Banks – Credit Facilities) Third Amendment Directions, 2026 in full), the following risk-weighting rules apply:
- Exposures to REITs shall be treated as Commercial Real Estate (CRE) exposures and attract a 100% risk weight.
- If the exposure qualifies as a capital market exposure under paragraph 95A of the RBI (Commercial Banks – Concentration Risk Management) Directions, 2025, the applicable risk weight increases to 125%.
- Lending to REITs by overseas branches of an Indian bank attracts a 150% risk weight.
These provisions are inserted via the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eighth Amendment Directions, 2026 (RBI/2026-27/111 DOR.CRE.REC.91/21-01-002/2026-27).
Who Is Affected
All commercial banks regulated by the RBI that have or plan to have any exposure to REITs—whether through direct lending, investment, or overseas branch operations—must adjust their risk-weighted asset calculations and capital adequacy ratios accordingly.
Compliance Timeline
- Default effective date: October 1, 2026
- Accelerated adoption: If a bank fully adopts the concurrent Third Amendment to Credit Facilities Directions before that date, the new REIT risk weights apply immediately upon such adoption.
No separate compliance filing is required; banks need to amend internal systems and reporting to reflect the revised risk weights from the applicable effective date.
Operational Impact
Risk weight differentials (100%, 125%, or 150%) directly affect the denominator of the Capital Adequacy Ratio (CRAR) calculation, potentially increasing capital requirements for REIT exposures relative to prior treatment. Banks with overseas branch REIT lending face the steepest capital charge. Treasury and risk teams should classify existing and new REIT exposures under the correct bucket (CRE vs. capital market) and branch jurisdiction to avoid misstatement.
Banks should review their current REIT portfolios, classify exposures per the new rules, and update internal RWA models and reporting templates well ahead of the October 1 deadline.
Source: Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Eighth Amendment Directions, 2026
Domain: rbi.org.in
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