India's NBFC sector has been in the spotlight after IL&FS, a major infrastructure financing and construction company, defaulted on a string of debt obligations in recent weeks triggering wider concerns about risks in the country's financial sector.
SBI said it believes that there is a "good opportunity" to expand its loan portfolio at "attractive rates".
"SBI today stepped up substantially a facility for purchasing a portfolio of assets from NBFCs to provide liquidity to NBFCs. This measure should alleviate liquidity concerns to a great extent," Economic Affairs Secretary Subhash Chandra Garg said.
The lender said it now sees scope to buy additional portfolio assets of Rs 200 billion to Rs 300 billion this year. The bank had initially planned for growth of Rs150 billion through portfolio purchases.
"This is going to be really beneficial for the NBFCs as they will get the liquidity they require, while SBI will get assets with high yields," said an analyst with a domestic brokerage who did not wish to be named.