The Reserve Bank of India’s (RBI) decision to allow banks to lend directly to Real Estate Investment Trusts (REITs) is expected to improve access to long-term capital, lower borrowing costs and reduce the sector’s dependence on the corporate bond market, according to the Indian REITs Association (IRA). The RBI on Wednesday issued a framework permitting banks to lend directly to REITs and Infrastructure Investment Trusts (InvITs). Under the norms, banks can lend only to Sebi-registered REITs with at least 80% of their underlying assets generating positive cash flows for at least one year. The aggregate exposure of all banks to a REIT, along with its underlying special purpose vehicles (SPVs) and holding companies, has been capped at 49% of the trust’s asset value. The norms will come into effect from October 1, or earlier if adopted by banks.