Banks can lend only to SEBI-registered, listed REITs with a minimum operating history of three years: RBI draft guidelines

Because REITs are trusts, the bank will have to take into account the legal provisions relating to these entities, especially those relating to the enforcement of securities. | Photo credit: FRANCIS MASCARENHAS

In addition, the central bank also issued updated draft guidelines for banks’ exposure to Infrastructure Investment Trusts (InvITs). These are similar to the guidelines issued for bank loans to REITs.

The central bank said the aggregate credit exposure of all banks to the borrowing REIT and the underlying SPVs/Holdcos (Special Purpose Vehicles/Holding Companies) taken together cannot exceed 49 percent of the value of the REIT’s assets as on March 31 of the preceding financial year, or such lower limit as may be decided by the bank’s board.

Lending to a REIT by a bank can only take place in the form of loans that do not involve rapid or increasing principal repayments.

A bank must strictly monitor the end use of funds lent to REITs to ensure that this route is not used to finance activities that are not permitted, such as the acquisition of land, even if this acquisition is part of a project.

Overseas branches may lend to REITs incorporated abroad if an effective insolvency/bankruptcy mechanism, either statutory or regulatory, is available in the relevant jurisdiction.

Legal provisions

Because REITs are trusts, the bank will have to take into account the legal provisions relating to these entities, especially those relating to the enforcement of securities.

Where bank financing is for the refinancing of existing term loans of SPVs (Special Purpose Vehicles), it is ensured that it is implemented only in respect of completed projects that have received a Certificate of Completion (CC), Occupancy Certificate (OC) or its equivalent.

Published on February 13, 2026