The Reserve Bank of India on Friday announced that banks will be permitted to lend to Real Estate Investment Trusts (REITs), a move aimed at improving credit access to the real estate investment ecosystem and supporting long-term funding for income-generating commercial assets.
The decision was announced alongside the RBI’s first monetary policy review of the 2026 calendar year, in which the Monetary Policy Committee (MPC) kept the benchmark repo rate unchanged at 5.25%, maintaining a pause after cumulative rate cuts of 125 basis points since February 2025.
Announcing the policy, Sanjay Malhotra said the MPC has opted for continuity as it assesses the transmission of earlier easing measures and evolving domestic and global macroeconomic conditions.
Banks allowed to lend to REITs
The RBI’s decision to allow bank lending to REITs is expected to strengthen financing avenues for the sector, which has grown steadily as a vehicle for monetising commercial real estate assets. The move could lower dependence on capital markets alone and provide REITs with more stable funding options, especially for asset acquisition and refinancing.
Inflation outlook: CPI estimates revised higher
On the inflation front, the RBI said the domestic inflation outlook remains benign, with headline CPI inflation staying below the tolerance band in November and December. However, the central bank revised its CPI estimates slightly upward, citing higher prices of precious metals.
- CPI inflation estimate for Q1 FY27: 4.0%
- CPI inflation estimate for Q2 FY27: 4.2%
Core inflation, excluding food and fuel, remains subdued at 2.6%, indicating limited underlying price pressures.
Growth outlook: GDP estimates remain robust
The RBI retained a constructive view on economic growth, projecting strong momentum in the coming quarters.
- Real GDP growth estimate for Q1 FY27: 6.9%
- Real GDP growth estimate for Q2 FY27: 7.0%
The central bank said risks to growth are evenly balanced, supported by steady domestic demand, public capital expenditure and improving external sentiment following the India–US trade agreement.
Policy stance
The latest review comes shortly after the Union Budget 2026–27, which reaffirmed the government’s focus on capital spending and fiscal consolidation. With inflation largely within comfort levels and growth holding up well, the RBI has signalled a wait-and-watch approach, keeping policy rates unchanged while introducing targeted measures such as allowing bank lending to REITs to support specific segments of the economy.
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