The Reserve Bank of India has amended its commercial bank credit directions to permit lending to Real Estate Investment Trusts registered with and regulated by the Securities and Exchange Board of India, and to replace the existing framework for bank lending to Infrastructure Investment Trusts. Banks may lend only to listed REITs and InvITs that meet minimum asset composition and cash flow tests, and must follow a common prudential framework covering board-approved policies, end-use monitoring, refinancing conditions, repayment structures, leverage, exposure limits and security. For REITs, at least 80 per cent of underlying assets must have generated positive operating cash flows for at least one year. For InvITs, at least 80 per cent of asset value must be invested in completed and revenue-generating infrastructure projects with net positive operating cash flows for at least one year. Lending cannot be used to support special purpose vehicles with existing loans from regulated entities that are already in financial difficulty, and refinancing is limited to completed projects. Loans should not use bullet or ballooning principal repayments, except for exposures held in banks’ investment portfolios as bonds, debentures or commercial paper. Overall leverage must remain within the Securities and Exchange Board of India prudential ceiling or a lower board-set limit, and the aggregate exposure of all banks to a REIT or InvIT together with its SPVs or holding companies cannot exceed 49 per cent of asset value on a gross basis. The rules also require full security coverage, including charges over property where applicable, assignments of cash flows and receivables, pledges of equity interests and escrow-based lender protections. The amendments take effect on October 1, 2026, or earlier if a bank adopts them in full. Existing InvIT loans that do not conform may run off to maturity, but banks cannot review or renew them after expiry, or enhance pre-existing limits, unless they comply with the amended rules.
Reserve Bank of India2026-06-10
Reserve Bank of India allows bank lending to listed REITs and revises InvIT rules with 49 per cent aggregate exposure cap
The Reserve Bank of India has amended commercial bank credit directions to permit lending to listed Real Estate Investment Trusts and to replace the framework for lending to Infrastructure Investment Trusts, both registered with the Securities and Exchange Board of India. Banks may lend only to REITs and InvITs that meet minimum asset composition and positive cash flow tests and must apply a common prudential framework covering end-use monitoring, refinancing, repayment structures, leverage, exposure limits and security. Existing non-compliant InvIT loans may run off to maturity, but banks may not renew or increase such facilities unless they meet the new rules.