New Delhi, Feb. 6 -- The Reserve Bank of India (RBI) has unlocked a fresh source of funds for the nation's property sector, allowing banks to lend directly to real estate investment trusts (Reits) for the first time.

The decision, announced on Friday by governor Sanjay Malhotra, ends years of regulatory disparity between Reits and their infrastructure peers, InvITs. By allowing access to bank credit, RBI is providing a cheaper alternative to the expensive bond and commercial paper markets that Reits have traditionally tapped for growth.

"To further promote financing to the real estate sector, it is proposed to allow banks to lend to Reits with certain prudential safeguards," Reserve Bank of India governor Sanjay Malhotra said while pres...