Indian central bank raises loan limits for small businesses, backs REIT lending
India's central bank on Friday announced measures to boost credit to small businesses and the real estate sector to improve access to formal financing and strengthen last-mile lending, Governor Sanjay Malhotra said in his policy address.
The Reserve Bank of India proposed doubling the limit on collateral-free loans for small enterprises to 2 million rupees ($22,170.49) from 1 million rupees ($11,085.25).
The revised norms will apply to loans sanctioned or renewed from April 1, 2026.
It also said banks would be allowed to lend to real estate investment trusts, subject to prudential safeguards, extending a facility already available to infrastructure investment trusts.
"Upon review and considering the presence of strong regulatory and governance framework for listed REITs, it is proposed to permit commercial banks to extend finance to REITs, subject to appropriate prudential safeguards," the RBI said in a statement.
"The existing guidelines in respect of lending to InvITs are also being harmonised for parity with prudential safeguards proposed for lending to REITs," it added.
Shares of Mindspace Business Parks REIT ticked 0.5% higher, leading gains among Indian listed REIT stocks.
Brookfield India Real Estate Trust rose 0.3%, while Embassy Office Parks REIT gained 0.1%.
"The move to allow banks to lend money directly to REITs within the rules makes it easier for REITs to raise capital, lowers expenses, and speeds up asset expansion in the office and retail segments," Anuj Puri, chairman of real estate consultancy firm ANAROCK Group said.
($1 = 90.2100 Indian rupees).
