RBI Introduces New Capital Adequacy Rules for Bank Exposure to REITs

The Reserve Bank of India (RBI) has issued the Eighth Amendment Directions, 2026 under its Prudential Norms on Capital Adequacy framework for commercial banks. The amendment follows recent changes introduced through the RBI's Credit Facilities Directions and prescribes specific risk-weight treatment for bank exposures to Real Estate Investment Trusts (REITs).

Under the revised framework, exposures to REITs will generally be classified as Commercial Real Estate (CRE) exposures and assigned a 100% risk weight. However, where such exposures qualify as capital market exposures under RBI's Concentration Risk Management Directions, a higher 125% risk weight will apply. Additionally, lending to REITs by overseas branches of Indian banks will attract a 150% risk weight.

The new provisions are scheduled to come into force from October 1, 2026, unless banks choose to adopt the related Credit Facilities Amendment Directions earlier in their entirety.