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RBI allows bank lending only to listed REITs
NDTV Profit··10 Jun
The RBI issued final directions allowing banks to lend only to SEBI-registered REITs listed on recognised stock exchanges. The rules also require banks to adopt board-approved policies covering credit appraisal, sanctioning, underwriting, risk management and monitoring.
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What It Means For You
- REIT investors may benefit from clearer financing rules, especially if they reduce leverage and end-use risk.
- Banks now have a more defined framework for lending to listed, regulated and cash-generating REITs.
- The 80 percent income-generating asset rule favours mature real estate portfolios over speculative development exposure.
What's Happening
- RBI finalised rules for bank lending to REITs and InvITs.
- Banks can lend only to SEBI-registered and listed REITs that meet asset and cash-flow conditions.
- Loans must be fully secured, capped by exposure limits and governed by board-approved lender policies.
Why REIT Rules Matter
- REITs pool investor money into income-generating real estate such as offices and commercial properties.
- Bank lending can help REITs grow, refinance or acquire assets, but excessive leverage can create systemic risk.
- RBI's framework aligns lending with the stable cash-flow model REITs are meant to represent.
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