RBI Issues Second Amendment Directions for Small Finance Banks on Lending to InvITs

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Small Finance Banks – Credit Facilities) Second Amendment Directions, 2026, introducing a comprehensive framework governing lending by Small Finance Banks (SFBs) to Infrastructure Investment Trusts (InvITs). The amended directions permit lending only to SEBI-regulated and listed InvITs, subject to stringent risk management, valuation assessment, end-use monitoring, and security requirements. Banks must establish board-approved lending policies covering appraisal standards, exposure limits, underwriting norms, and monitoring mechanisms. The framework also restricts financing for acquisition of equity, imposes prudential leverage limits, and caps aggregate bank exposure to an InvIT and its underlying entities at 49% of the InvIT’s asset value. The directions further mandate robust security coverage and lender protections. These amendments will come into effect from October 1, 2026, with existing non-compliant loans allowed to run off until maturity without renewal or enhancement.