Mumbai, Feb. 6 -- The Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday said that banks will be allowed to lend directly to Real Estate Investment Trusts (REITs), as the central bank moves to improve financing access for the real estate sector.

Announcing the outcome of the Monetary Policy Committee (MPC) meeting, the Governor said, "To further promote financing to the real estate sector, it is proposed to allow banks to lend to REITs with certain prudential safeguards."

He added that the proposal aims to strengthen credit flows to the sector in a calibrated and safe manner.

At present, banks are not permitted to lend directly to the REIT entity and can extend loans only to the underlying special purpose vehicles (SPVs). T...