RBI Finalizes Amendment Directions on Lending to REITs and InvITs

The Reserve Bank of India (RBI) has issued final amendment directions that permit commercial banks to extend credit facilities to Real Estate Investment Trusts (REITs) and harmonize the existing lending guidelines for Infrastructure Investment Trusts (InvITs). This follows the draft directions issued on February 13, 2026, and incorporates stakeholder feedback regarding prudential safeguards.

What Changed

The primary regulatory shift is the formal inclusion of REITs as an eligible asset class for commercial bank lending. To manage systemic risk, this permission is subject to appropriate prudential safeguards, including a regulatory ceiling on total exposure to REITs. Additionally, the RBI has harmonized the lending framework for InvITs with the new safeguards established for REITs, ensuring a consistent approach to credit risk management across both investment trust structures.

Who Is Affected

The following entities are subject to these new amendment directions:

• Commercial Banks: Governed by the Third Amendment Directions (2026) for Credit Facilities and Concentration Risk Management, and the Eighth Amendment Directions (2026) for Capital Adequacy.
• Small Finance Banks (SFBs): Governed by the Second Amendment Directions (2026) for Credit Facilities.
• All India Financial Institutions (AIFIs): Governed by the 2026 Amendment Directions for Credit Facilities.

Operational Impact

Financial institutions must update their credit risk models and concentration monitoring systems to account for the new exposure ceilings for REITs. While the RBI initially proposed amendments to the Reserve Bank of India (Commercial Banks – Financial Statements: Presentation and Disclosures), 2025, it has decided not to amend these disclosure requirements at this time due to upcoming changes to asset class capital charges effective April 1, 2027. Banks should monitor their REIT and InvIT portfolios closely to ensure compliance with the newly established concentration risk limits.

Lending institutions should review their current exposure to InvITs to ensure alignment with the harmonized prudential standards.

Source: RBI issues Final Amendment Directions on Lending to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)
Domain: rbi.org.in