INDUSTRY
RBI unveils new norms to finance REITs, InvITs; rejects funding land acquisitions
- IBJ Bureau
- Jun 11, 2026
The Reserve Bank of India (RBI) has issued final rules that permit commercial banks to lend to real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).
The new norms retain key prudential safeguards on exposure limits, asset quality and repayment structures.
Among major changes, the RBI has said that overseas branches of Indian banks may participate in REIT financing under syndication arrangements, subject to a 20 per cent cap on contribution and a 150 per cent risk weight.
The requirement for an insolvency mechanism has been replaced with a broader “effective recovery mechanism” condition in overseas jurisdictions.
The central bank has, however, rejected requests to allow financing of land acquisition and under-construction assets through REIT and InvIT structures, reiterating that activities not permitted directly cannot be financed indirectly.
The RBI has relaxed the earlier three-year operational requirement by linking it to the cash-flow performance of underlying assets.
It has mandated that at least 80 per cent of underlying assets must generate positive cash flows for at least one year.
The RBI has also removed the earlier proposal on “material adverse regulatory action”, instead directing lenders to assess such impacts through due diligence.
Concerns regarding exposure to stressed special purpose vehicles (SPVs) have been partially accepted, with restrictions placed on financing SPVs already facing financial difficulty under the RBI’s stressed asset norms.
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