Recent RBI and SEBI measures on REITs, ECBs and bank financing are significant for deepening institutional and retail participation and broadening access to capital.
Law.asia reported that the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have given real estate increasing regulatory attention. Recent developments on real estate investment trusts (REITs), external commercial borrowings (ECBs) and bank financing are significant for deepening both institutional and retail participation and broadening access to capital.
In June 2026, the RBI issued directions permitting commercial banks to extend finance to listed REITs and infrastructure investment trusts (InvITs), subject to prudential safeguards. Among other safeguards, the framework requires the REIT to be listed and registered with SEBI, with a substantial proportion of underlying assets demonstrating positive operating cash flows. Aggregate bank exposure to a REIT and its special purpose vehicles or holding companies is also subject to a prudential ceiling linked to the value of the REIT's assets.
In February 2026, the RBI rationalised the ECB framework, refining the definition of real estate business and introducing exclusions from the restriction on using ECB proceeds for real estate business. Purchase, sale and lease (not amounting to transfer) of land or immovable property for purposes including industrial parks, integrated townships, special economic zones, infrastructure, construction-development projects, own-use premises and real estate broking are excluded from that definition. The article said the distinction between permitted development activity and holding real estate as an investment for profit remains important, so ECB availability depends on the transaction's nature and structure. The reforms also permit ECB proceeds to be used for strategic corporate actions including acquisitions of control.
In March 2026, the RBI amended its capital-market exposure framework to permit banks to provide acquisition financing to Indian non-financial companies for strategic acquisitions, subject to eligibility, leverage, valuation and security requirements. The article said that for real estate, the significance lies in the potential interaction between acquisition finance, REIT structures and platform consolidation, and that foreign direct investment restrictions must also be considered in transactions involving foreign capital.
In March 2024, SEBI introduced the SM REIT framework. To be covered, the value of assets under each scheme must be at least US$6 million (INR500 million) (USD5.3 million) and less than US$59.5 million (INR5 billion). The minimum investment of US$12,000 (INR1 million) makes the structure more accessible than traditional direct real estate investment.
