Adds statement from Embassy REIT CEO in paragraph 10, updates share moves
By Gopika Gopakumar and Hritam Mukherjee
MUMBAI, Feb 6 (Reuters) - India's central bank on Friday announced measures to boost credit to small businesses and the real estate sector to improve access to formal financing and strengthen last-mile lending.
The Reserve Bank of India proposed doubling the limit on collateral-free loans for small enterprises to 2 million rupees ($22,170.49) from 1 million rupees ($11,085.25).
The revised norms will apply to loans sanctioned or renewed from April 1, 2026.
The Reserve Bank of India also said banks would be allowed to lend to real estate investment trusts under prudential safeguards, extending a facility already available to infrastructure investment trusts.
REITs own and manage income-generating assets such as offices and malls. India's markets regulator recently allowed them to be treated as equity, opening the door to mutual fund investments.
Shares of Mindspace Business Parks REIT MINS.NS rose 0.9% to lead listed trusts, while Brookfield India Real Estate Trust BROF.NS gained 0.2% and Nexus Select Trust NEXE.NS advanced 0.5% in afternoon trade.
The broader benchmarks were mixed in afternoon trade, clawing back some of their losses after the central bank kept rates unchanged as expected on Friday.
"Upon review and considering the presence of strong regulatory and governance framework for listed REITs, it is proposed to permit commercial banks to extend finance to REITs, subject to appropriate prudential safeguards," the RBI said in a statement.
The existing guidelines are being aligned to match "prudential safeguards" proposed for lending to REITs, it added, and once made effective, could spur fresh funding into property assets and stoke the growth of the sector.
"This policy will help expand access to longer-term, competitive bank finance, which will support healthier balance sheets and stable growth by reducing the need for frequent refinancing," Amit Shetty, chief executive of Embassy Office Parks REIT EMBA.NS said.
($1 = 90.2100 Indian rupees).
(Reporting by Gopika Gopakumar in Mumbai and Hritam Mukherjee in Bengaluru; Editing by Nivedita Bhattacharjee)
((Gopika.Gopakumar@thomsonreuters.com;))