The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks – Concentration Risk Management) Third Amendment Directions, 2026 consequent to the amendments introduced under the Commercial Banks – Credit Facilities framework for lending to REITs and InvITs. The amendments have been issued under Sections 21 and 35A of the Banking Regulation Act, 1949.
Internal Exposure Limits for Real Estate Sector
Under the amendment, RBI has deleted Paragraph 94 of Chapter V and introduced a new Paragraph 94A requiring banks to establish internal limits for their aggregate exposure to the real estate sector. Banks are also required to prescribe sub-limits for various categories of real estate exposures based on their business model and risk appetite.
Prudential Cap on Exposure to REITs
As an additional safeguard, RBI has prescribed that the sub-limit for a bank’s aggregate exposure to Real Estate Investment Trusts (REITs) shall be subject to a prudential ceiling of 10% of the bank’s eligible capital base. This measure is intended to strengthen concentration risk management and prevent excessive exposure to the REIT sector.
These Directions shall come into force from October 1, 2026, or an earlier date if the directions contained in the Reserve Bank of India (Commercial Banks – Credit Facilities) Third Amendment Directions, 2026 are adopted by a bank in entirety.
