India’s central bank has unveiled a set of measures aimed at boosting credit flow to small businesses and the real estate sector, signalling a renewed push to deepen access to formal financing and support economic activity at the grassroots level. The steps were announced on Friday by Reserve Bank of India governor Sanjay Malhotra during his policy address.
At the centre of the package is a proposal to double the ceiling on collateral-free loans available to small enterprises. Under the revised framework, the limit will rise to 2 million rupees, or about $22,170, from the current 1 million rupees. The move is intended to ease financing constraints for micro and small businesses that often struggle to provide collateral despite viable operations and credit demand.
The RBI said the revised norms would apply to loans that are sanctioned or renewed from April 1, 2026, giving banks time to adjust their systems and risk assessment frameworks. Policymakers have increasingly focused on strengthening credit delivery to smaller firms, which play a critical role in employment generation but remain heavily dependent on informal sources of finance.
In a parallel move aimed at the property market, the central bank said it would allow commercial banks to lend to real estate investment trusts, subject to prudential safeguards. This facility was previously available only to infrastructure investment trusts, and the RBI said the existing guidelines for InvIT lending would now be harmonised to ensure parity with the safeguards proposed for REITs.
The regulator said the decision followed a review of the regulatory and governance framework governing listed REITs, which it described as strong enough to justify broader access to bank financing. By opening this channel, the RBI is seeking to diversify funding sources for the real estate sector while maintaining oversight to manage systemic risk.
Markets reacted positively to the announcement. Shares of Mindspace Business Parks REIT rose 0.5 per cent, leading gains among listed Indian REITs. Brookfield India Real Estate Trust was up 0.3 per cent, while Embassy Office Parks REIT gained 0.1 per cent in early trading.
Industry participants said the changes could have a meaningful impact on capital formation in commercial real estate. Anuj Puri, chairman of real estate consultancy ANAROCK Group, said allowing banks to lend directly to REITs within a defined regulatory framework would make it easier for trusts to raise capital, lower financing costs and accelerate asset expansion, particularly in the office and retail segments.
Together, the measures underscore the RBI’s effort to balance financial stability with targeted support for growth, as it looks to channel credit more efficiently to sectors seen as vital to India’s medium-term economic momentum.
