Banks May Be Allowed to Lend to InvITs, says RBI

The Reserve Bank of India (RBI) has reportedly notified that banks would be permitted to lend to Infrastructure Investment Trusts (InvITs). However, the sanctioning of funds to InvITs will be subject to certain conditions.

An Infrastructure Investment Trust is a collective investment instrument which works very much similar to mutual funds. They are designed to pool money from individuals and institutional investors and directly invest them in assets linked to infrastructure to generate an income over time.

Lending loans to InvITs will be allowed if they comply with parameters such as the leverage ratio, underwriting norms concerned with Special Purpose Vehicle (SPV) and board-approved policies, among others.

Also Read: SEBI lowers minimum subscription norms for REIts, InvIts

According to sources, the notification issued by the central bank directed the banks to sanction loans to InvITs ‘without prejudice to generality’. The banks were also directed to implement stringent credit policies and tighter scrutinisation mechanisms for funds which are linked to SPVs.

In a statement, the RBI has requested banks to come up with a board-approved policy which shall, in turn, monitor all the mechanisms concerned with sanctioning of loans to InvITs. The banks will scrutinise the sanctioning criteria, appraisal mechanism and internal limits among others before lending the loans.

However, RBI added that only InvITs which are linked to SPVs with ongoing loans and is experiencing financial difficulty would be eligible to avail loans from banks.

For any clarifications/feedback on the topic, please contact the writer at

You May Also Like

Taxation of dividend income received on or after 1 April 2020 (FY 2020-21)

You may receive a dividend from your equity or mutual fund investments.…

Know the taxation rules for income F&O trading

Futures and options are stock derivatives that are traded in the stock…

Important Cash Transaction Limits and Penalties Under Income Tax That You Need to Know About

In India, there are a lot of transactions that go unaccounted for,…
Gold Jewellery

24K Gold Rate in India for November 2019: Week 4

The fourth week began with the gold rate in India holding at…