New Delhi, Feb. 9 -- In a move aimed at deepening the financing pool for India's real estate sector, the Reserve Bank of India (RBI) has proposed allowing banks to lend to Real Estate Investment Trusts (REITs). The step is expected to help REITs raise long-term capital at a more efficient cost, supporting their growth and potentially boosting income for unitholders.

On 6 February, the RBI said it plans to permit commercial banks to extend finance to REITs, subject to prudential safeguards. In its Statement on Developmental and Regulatory Policies, the central bank noted that the proposal follows a review of the sector and takes into account the strong regulatory and governance framework in place for listed REITs.

REITs are investment ve...