Mumbai: State Bank of India chairman Rajnish Kumar on Monday said the government and Reserve Bank of India are unlikely to come out with any stimulus package for the non-banking finance (NBFC) sector. Kumar also ruled out the need for any further measures for non-banks.

"For the NBFC sector, the government and Reserve Bank of India have done enough. It is now only the execution and roll out by the lenders. NBFC sector I don't think there is anything remaining which can be done by the government. Partial credit enhancement, interest rates have moderated. So what else can you demand," said Kumar on the sidelines of FIBAC2019, a banking conclave organised by Indian Banks’ Association and industry body FICCI.

In the Union budget, the government had announced a partial credit guarantee scheme which encouraged banks to buy high-rated pooled assets of up to 1 lakh crore of financially sound NBFCs, for which the Centre will provide a one-time six-month partial credit guarantee for the first loss of up to 10%.

To support this measure, RBI tweaked banks’ bond-holding norms, allowing them to classify government securities of up to 1% of the deposit base as high-quality assets under Basel III norms. This will allow banks to borrow an additional 1.34 lakh crore exclusively for buying such pooled assets and giving loans to NBFCs.

The government also amended the RBI Act, giving the central bank power to remove any director and supersede the board of directors of NBFCs for five years if the affairs of non-banks are conducted in a manner detrimental to the interests of creditors or depositors, or financial stability.

RBI on its part also announced several measures to support the sector, including increase in the ceiling for bank’s exposure to a single NBFC to 20% of its Tier I capital from 15% earlier. The central bank has also allowed bank lending to NBFCs, excluding microfinance institutions, for on-lending to certain sectors to be classified as priority sector loans.

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