MUMBAI: Bankers hailed the Reserve Bank of India’s decision to allow them to invest in Real Estate Investment Trust (Reits) and Infrastructure Investment Trusts (InvITs). The move is expected to help revive the cash-starved infrastructure sector.
Now, banks can invest in equity-linked mutual funds, venture capital funds (VCFs) and equities to the extent of 20 per cent of their Net Owned Fund (NOF).
“It is proposed to allow banks to invest in REITs and InvITs within this umbrella limit. Detailed guidelines will be issued by May-end 2017,” RBI said.
Experts consider the move as positive for the real estate and infrastructure sector as well as for banks. “Overall, the policy is well balanced with new supportive measures on asset reconstruction companies (ARCs),” said Melwyn Rego, MD, Bank of India and chairman, Indian Banking Association.
It may be noted that Sebi has already issued regulations for REITs and InvITs and requested the RBI to allow banks to participate in these schemes.
“Banks’participation under REITs and InvITs is expected to give more investment avenues to the financial industry,” said Ashwani Kumar, chairman and managing director, Dena Bank.
According to Chanda Kochhar, MD, ICICI Bank, the policy lays down important developmental policies such as expanding investor base in REITs, which will help expand and deepen domestic financial markets.