Banks Can Now Fund REITs in India, Strengthening Real Estate Sector

Mumbai, February 6, 2026 : The Reserve Bank of India (RBI) has now allowed banks to lend directly to Real Estate Investment Trusts (REITs). RBI Governor Sanjay Malhotra announced this during the latest monetary policy update, noting that these transactions would come with “certain financial safeguards”.

REITs, which manage office parks, malls, and warehouses, have become a popular vehicle for institutional investors looking to tap into India’s booming property market. Experts note that this step could make it easier for REITs to raise funds, reduce costs, and speed-up expansion in office and retail segments.

However, analysts caution that lending to REITs carries risks. Real estate cash flows are highly sensitive to occupancy rates, rental cycles, and interest rate changes, and past boom-bust cycles have previously affected bank assets. Still, the move is seen as a potential catalyst for long-term sector growth.