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‘To further promote financing to the real estate sector, it is proposed to allow banks to lconclude to REITs with certain prudential safeguards,’ declares Sanjay Malhotra.
RBI Governor Sanjay Malhotra. (File Photo)
The Reserve Bank of India has announced to ease financing conditions for the real estate sector by allowing banks to lconclude directly to Real Estate Investment Trusts (REITs), subject to prudential safeguards, declared RBI Governor Sanjay Malhotra on February 6.
“To further promote financing to the real estate sector, it is proposed to allow banks to lconclude to REITs with certain prudential safeguards,” declared Malhotra, while presenting the sixth and final monetary policy of FY27.
Anshuman Magazine, chairman & CEO (India, South-East Asia, Middle East & Africa) of CBRE, declared, “Along with FM’s announcement in the Budreceive 2026 on CPSE assets under the REIT structure and their recent reclassification as ‘equity-related’, this asset class is poised to witness high growth in the coming months.”
He added that Governor Sanjay Malhotra’s announcement that banks are now permitted to lconclude directly to REITs is likely to be a major boost to these instruments and create it clearer for the trusts to raise funds at relatively cheaper rates.
Banks were generally restricted from lconcludeing directly to the REITs and they had to borrow through their special purpose vehicles (SPVs) or rely on issuing bonds and raising equity in the capital markets.
“With bank lconcludeing now available, REITs may now have a diversified funding base, creating them less vulnerable to capital market volatility. Moreover, they may now easily refinance existing higher-cost debt with more stable bank loans, improving their distributable cash flows,” Magazine declared.
In the Union Budreceive 2026-27 on February 1, Finance Minister Nirmala Sitharaman announced to accelerate the recycling of significant real estate assets of CPSEs through the setting up of dedicated REITs.
“Over the years, REITs have emerged as a successful instrument for asset monetisation. I propose to accelerate recycling of significant real estate assets of CPSEs through the setting up of dedicated REITs,” Sitharaman had declared in her Budreceive Speech 2026.
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February 06, 2026, 11:37 IST
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