Mumbai, February 6
Reserve Bank of India Governor Sanjay Malhotra said that the new proposal to allow banks to lend to Real Estate Investment Trusts will be positive for the banks and the sector alike. He explained that while a framework for lending to real estate companies already existed, trusts were previously excluded from direct bank credit.
"It will help the real estate sector and the REITs. There is already a framework for lending by the banks to the real estate, only through companies and other legal entities. That lending was not allowed to be done in case the borrower was a trust," Governor Malhotra said. He noted that since similar lending is already permitted for Infrastructure Investment Trusts (InvITs), this change serves as a natural expansion. "So it's just an expansion instead of lending at the company level or the trust level. We think this is a positive for the banks as well as for the real estate sector," the RBI Governor said, responding to a query by ANI.
Addressing concerns about liquidity and the recent volatility in market rates, the Governor emphasised that the central bank remains committed to keeping the system well-funded. He stated that it is the "primary duty" of the Bank to provide ample liquidity to meet the productive needs of the economy.
When asked about the strategy for managing the government's large borrowing program, he urged observers to look at the net numbers rather than just the gross figures.
"We should be looking at net numbers. In the year to come, money will be raised through treasury bills. It will help manage the yield curve more effectively," the Governor noted. He added that the RBI would be proactive in its approach, using various tools like Open Market Operations (OMOs) and Variable Rate Repo (VRR) auctions to ensure that monetary policy transmits effectively across all markets. "Liquidity management is a continuous operation, not limited to policy statements," he clarified.
The RBI also announced a major update for the MSME sector by doubling the lending limit for collateral-free loans. The Governor explained that the limit has been increased from 10 lakh rupees to 20 lakh rupees primarily as an adjustment for inflation. "The previous limit of 10 lakh rupees was set in 2010. This move aims to ensure smaller customers are not deprived of access to important financial resources," he said, highlighting that the change aligns with long-standing efforts to support small enterprises.
On the topic of digital payments and the Union Budget's decision to lower the subsidy for UPI, the Governor maintained a pro-customer stance. While the payments industry has been discussing how to manage costs, the RBI emphasised that the focus remains on the user. "There's a discussion within the payments industry... about focusing on the customer side for UPI," he mentioned, reiterating that the central bank prioritises the interests of the general public in the digital payment ecosystem.
The Governor also addressed growing concerns over the "mis-selling" of financial products. While he noted that the overall rate of mis-selling in the system is not alarmingly high, he stressed that the impact on individual customers is what matters most. "Every individual customer is important. Despite the low percentage and impact, mis-selling remains a significant concern," he stated. He assured that the RBI has dedicated significant research and attention to addressing these issues to ensure better protection for all bank customers.
- ANI
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