“I actually believe some private banks might invest in these instruments, as they have higher yields of about 12 to 14 per cent. Banks may take small exposures to these instruments,” said a banking analyst with a leading foreign brokerage, on condition of anonymity.
However, some other experts believe banks could take time to warm up to such investments. Tirthankar Patnaik, India strategist, Mizuho Bank, said, “I am not too excited about this move, as it is just creating one more base of investors for REITs. To my mind it’s just opening one more avenue for banks to park excess money on which they will earn higher yields provided they are willing to take up that risk.”
Another concern analysts have is that these instruments — REITs in particular — have not taken off and hence not a good investment option just yet. InvITs, though, are a step ahead of REITs, but still have some ambiguity around taxation of these instruments. For now, most experts believe, even if banks do, these investments will be smaller in size and might not give a significant boost to their other income.