RBI allows bank lending to REITs, doubles MSE loan limit to Rs 20 lakh

Mumbai: The Reserve Bank of India (RBI) on Friday announced a broad set of measures aimed at deepening credit markets, improving access to finance and strengthening last-mile lending, while unveiling the final bi-monthly monetary policy of the financial year.

The central bank proposed allowing banks to lend to Real Estate Investment Trusts (REITs) with prudential safeguards to expand financing options for the real estate sector.

While banks were initially barred from lending to both REITs and Infrastructure Investment Trusts (InvITs), lend-ing to InvITs was later permitted, but REITs remained excluded. RBI Governor Sanjay Malhotra said the move follows a review and reflects confidence in the regulatory and governance frame-work for listed REITs.

Existing norms for InvIT lending will be harmonised with the safeguards proposed for REITs. Draft directions will be issued for public consultation. India currently has five listed REITs.

The RBI also announced steps to develop the corporate bond market, including a framework for derivatives on credit indices and total return swaps on corporate bonds, as proposed in the Union Budget. It further proposed revised guidelines for authorised dealer banks and standalone prima-ry dealers, giving them greater flexibility in foreign exchange transactions. The Rs 2.5 lakh crore cap under the Voluntary Retention Route for foreign investments will also be removed.

On the credit delivery front, Malhotra said the limit for collateral-free loans to micro and small enterprises (MSE) will be doubled to Rs 20 lakh for loans sanctioned or renewed from April 1, 2026. The RBI will also review guidelines for business correspondents and issue revised instructions for the Kisan Credit Card scheme to expand coverage, streamline operations and address emerging needs.