The Reserve Bank of India has amended its capital adequacy rules for commercial banks to set specific risk weights for exposures to Real Estate Investment Trusts. Exposures to REITs will be treated as commercial real estate exposures and carry a 100 percent risk weight, rising to 125 percent where the exposure qualifies as a capital market exposure under the concentration risk management framework. Lending to REITs by overseas branches of an Indian bank will attract a 150 percent risk weight. The change inserts new provisions into Chapter IV on risk weighted assets of the 2025 capital adequacy directions. It takes effect from October 1, 2026, or earlier if a bank adopts in full the related 2026 amendment to the credit facilities directions.
Reserve Bank of India assigns 100 percent to 150 percent risk weights to bank exposures to REITs
The Reserve Bank of India has amended capital adequacy rules to assign specific risk weights to commercial banks’ exposures to Real Estate Investment Trusts, treating them as commercial real estate exposures with a 100 percent risk weight, or 125 percent where they qualify as capital market exposures under the concentration risk management framework. Lending to REITs by overseas branches of Indian banks will carry a 150 percent risk weight, with the changes inserted into Chapter IV on risk weighted assets.