RBI Revises Concentration Risk Framework, Introduces REIT Exposure Ceiling for Banks

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks – Concentration Risk Management) Third Amendment Directions, 2026, introducing changes to banks' exposure norms related to the real estate sector. Under the amendment, existing paragraph 94 of the Concentration Risk Management Directions, 2025 has been deleted and replaced with a new provision requiring banks to establish internal limits for aggregate exposure to the real estate sector and its sub-categories based on their business models. The amendment further stipulates that a bank's aggregate exposure to Real Estate Investment Trusts (REITs) will be subject to a prudential ceiling of 10% of the bank's eligible capital base. The directions will come into force from October 1, 2026, or earlier if the related RBI Credit Facilities Third Amendment Directions, 2026 are adopted by a bank in full.