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What is the story about?
The Indian REITs Association (IRA) on Thursday welcomed the Reserve Bank of India’s decision to permit banks to lend directly to Real Estate Investment Trusts (REITs), calling it a significant step toward strengthening the sector’s financing framework.
RBI Governor Sanjay Malhotra announced the policy change earlier in the day, allowing banks to extend credit directly to REITs for the first time. IRA said the move would give REITs access to more stable and long-term funding, which is critical for an asset class built on income-generating commercial real estate.
According to the association, REITs have largely depended on debt raised through securities subscribed by mutual funds, non-banking financial companies and other institutional investors. These instruments typically carry tenors of three to five years, making long-term funding a recurring challenge for the sector.
IRA said direct bank lending could improve financing efficiency by enabling longer-tenor borrowings at the REIT level, reducing dependence on frequent refinancing. The association added that better access to long-term capital would also support portfolio expansion and help deepen the formalisation and institutionalisation of India’s commercial real estate market.
India currently has five publicly listed REITs — Brookfield India Real Estate Trust, Embassy Office Parks REIT, Knowledge Realty Trust, Mindspace Business Parks REIT and Nexus Select Trust.
The IRA, a non-profit industry body formed under the guidance of SEBI and the Ministry of Finance, said it will continue to work with regulators and lenders to facilitate the implementation of the new lending framework.
RBI Governor Sanjay Malhotra announced the policy change earlier in the day, allowing banks to extend credit directly to REITs for the first time. IRA said the move would give REITs access to more stable and long-term funding, which is critical for an asset class built on income-generating commercial real estate.
According to the association, REITs have largely depended on debt raised through securities subscribed by mutual funds, non-banking financial companies and other institutional investors. These instruments typically carry tenors of three to five years, making long-term funding a recurring challenge for the sector.
IRA said direct bank lending could improve financing efficiency by enabling longer-tenor borrowings at the REIT level, reducing dependence on frequent refinancing. The association added that better access to long-term capital would also support portfolio expansion and help deepen the formalisation and institutionalisation of India’s commercial real estate market.
India currently has five publicly listed REITs — Brookfield India Real Estate Trust, Embassy Office Parks REIT, Knowledge Realty Trust, Mindspace Business Parks REIT and Nexus Select Trust.
The IRA, a non-profit industry body formed under the guidance of SEBI and the Ministry of Finance, said it will continue to work with regulators and lenders to facilitate the implementation of the new lending framework.
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