Banking · Para-Banking Regulations
Zenith Bank intends to introduce a 'Composite Real Estate Financial Package' comprising investments in a REIT, underwriting a new InvIT issue up to 10%, and acting as an Investment Manager for a private REIT through a subsidiary. According to the RBI's Master Direction on Para-Banking, which of the following is correct regarding the feasibility?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The underwriting limit for any commercial bank is capped at 50% of the single issue size, making the 10% target irrelevant.
- 2Providing credit enhancement facilities to an InvIT SPV is strictly prohibited for commercial banks under all circumstances.
- 3The bank cannot act as an Investment Manager for a REIT through a subsidiary without obtaining prior specific approval from the RBI, and the cumulative capital market exposure must stay within prescribed limits.✓
- 4The entire package is automatically feasible because all individual activities are permitted without cumulative regulatory caps.
Correct answer
The bank cannot act as an Investment Manager for a REIT through a subsidiary without obtaining prior specific approval from the RBI, and the cumulative capital market exposure must stay within prescribed limits.
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