RBI allows banks to invest up to 10% of REITs', InvITs' capital

MUMBAI: In a move to boost spending on infrastructure, the RBI on Tuesday allowed banks to invest up to 10 per cent of the unit capital of single Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

"It has been decided to allow banks to participate in REITs and InvITs within the overall ceiling of 20 per cent of their net worth permitted for direct investments in shares, convertible bonds/debentures, units of equity-oriented mutual funds and exposures to venture capital funds (VCFs)," a Reserve Bank of India notification said.

The apex bank said the permission was subject to the condition that banks will not invest more than 10 per cent of the unit capital of a REIT or an InvIT.

"Banks should put in place a Board approved policy on exposures to REITs/ InvITs which lays down an internal limit on such investments within the overall exposure limits in respect of the real estate sector and infrastructure sector," the notification said.

Banks will also have to ensure adherence to the prudential guidelines on equity investments, classification and valuation of investment portfolio, Basel III Capital requirements for commercial real estate exposures and large exposure framework, it added.

In its first bi-monthly monetary policy review of the fiscal presented on April 6, the RBI had permitted banks to invest in REITs and InvITs in a measure designed to revive stalled infrastructure projects.

Source: https://goo.gl/1ULpd2