RBI/2016-17/280
DBR.No.FSD.BC.62/24.01.040/2016-17
April
18, 2017
All Scheduled Commercial Banks
(excluding RRBs)
Dear Sir/ Madam,
Prudential Guidelines – Banks’
investment in units of REITs and InvITs
Please refer to the paragraph 12
of the Statement on Developmental and Regulatory Policies (extract enclosed)
issued by RBI on April 06, 2017. As indicated therein, it has been decided
to allow banks to participate in Real Estate Investment Trusts (REITs) and
Infrastructure Investment Trusts (InvITs) within the overall ceiling of 20
per cent of their net worth permitted for direct investments in shares,
convertible bonds/ debentures, units of equity-oriented mutual funds and
exposures to Venture Capital Funds (VCFs) [both registered and
unregistered], subject to the following conditions:
i.
Banks
should put in place a Board approved policy on exposures to REITs/ InvITs
which lays down an internal limit on such investments within the overall
exposure limits in respect of the real estate sector and infrastructure
sector.
ii.
Banks
shall not invest more than 10 per cent of the unit capital of an REIT/
InvIT.
iii.
Banks
should ensure adherence to the prudential guidelines issued by RBI from
time to time on Equity investments by Banks, Classification and Valuation
of Investment Portfolio, Basel III Capital requirements for Commercial Real
Estate Exposures and Large Exposure Framework, as applicable.
Yours faithfully
(R. K. Moolchandani)
General Manager
Encl: as above
Annex
Extract
(Paragraph 12) of Statement on Developmental and Regulatory Policies,
Reserve Bank of India – issued on April 6, 2017
Real Estate Investment Trust
(REITS) and Infrastructure Investment Trust (InvITs): Banks’ Participation
– The Securities and
Exchange Board of India (SEBI) has put in place regulations for REITS and
InvITs and requested the Reserve Bank to allow banks to participate in
these schemes. Currently, banks are allowed to invest in equity-linked
mutual funds, venture capital funds (VCFs) and equities to the extent of 20
percent of their NOF. It is proposed to allow banks to invest in REITS and
InvITs within this umbrella limit. Detailed guidelines will be issued by
end-May 2017.
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