The RBI has permitted banks to lend directly to real estate investment trusts (REITs), a move expected to widen funding avenues and lower the cost of capital.

“Upon review and considering the presence of strong regulatory and governance framework for listed REITs, it is proposed to permit commercial banks to extend finance to REITs, subject to appropriate prudential safeguards. The existing guidelines in respect of lending to InvITs are also being harmonised for parity with prudential safeguards proposed for lending to REITs,” the RBI said in its statement on developmental and regulatory policies.

Industry bodies said the move would provide REITs access to stable, long-term funding. “Direct access to bank lending provides REITs with a stable, long-term source of funding, expanding the avenues of fundraising for these instruments. This is important for an asset class built on long-duration, income-generating real estate,” the Indian REITs Association said.

REITs largely raise debt through the issuance of securities subscribed by mutual funds and NBFCs. As investors prefer instruments with three-to-five-year tenors, long-term funding remains a challenge.

“REITs have historically relied on capital market issuances and sponsor-backed financing. Access to bank credit will serve as an additional funding avenue,” said Shishir Baijal, CMD, Knight Frank India.

MSE loan

The RBI has enhanced the collateral-free loan limit for micro and small enterprises (MSEs) to ₹20 lakh from ₹10 lakh. The revised limit will apply to all loans to MSE borrowers sanctioned or renewed on or after April 1, 2026.

The move follows the Budget announcement of a ₹10,000 crore SME growth fund to improve credit access.