RBI to Allow Bank Loans to REITs by July 1, Capping Exposure at 49%

• RBI proposes allowing banks to extend loans to Real Estate Investment Trusts (REITs) by July 1, 2026.
• Total bank exposure to a REIT will be capped at 49% of the asset value.
• Only listed REITs that have completed a minimum of three years of operations and have no adverse regulatory action will be eligible.
• Banks must strictly monitor the end use of funds to prevent financing of unpermitted activities like land acquisition.
• The draft circular also aims to harmonize lending guidelines for InvITs with the new REIT safeguards.