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Cabinet Approves ₹5,000 Crore Equity Infusion into SIDBI

  • 22 Jan 2026

On 21st January 2026, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved an equity infusion of ₹5,000 crore into the Small Industries Development Bank of India (SIDBI) to strengthen the flow of credit to Micro, Small and Medium Enterprises (MSMEs).

Key Points

  • Purpose of Infusion: The equity support aims to expand SIDBI’s lending capacity and increase access to affordable credit for MSMEs.
  • Source of Capital: The infusion will be made by the Department of Financial Services (DFS).
  • Tranche-wise Infusion Plan: Of the total amount, ₹3,000 crore will be infused in 2025‑26 at a book value of ₹568.65 as on 31 March 2025.
    • ₹1,000 crore will be infused in 2026‑27 at the book value prevailing at the end of 2025‑26.
    • Another ₹1,000 crore will be infused in 2027‑28 at the book value prevailing at the end of 2026‑27.
  • Expansion of MSME Coverage: The number of MSMEs receiving financial assistance from SIDBI is expected to increase from 76.26 lakh (FY 2025) to around 102 lakh by FY 2028, adding nearly 25.74 lakh new beneficiaries.
  • Employment Generation: As per the Ministry of MSME, India’s MSMEs currently employ about 30.16 crore people. The expanded credit support is expected to generate employment for approximately 1.12 crore people by FY 2027–28.
  • Rising Risk-Weighted Assets: SIDBI’s risk-weighted assets are projected to rise due to increased directed lending, expansion of the loan portfolio, digital collateral-free credit products, and venture debt support for startups.
  • Capital Adequacy Requirement: Additional capital is required to maintain a healthy Capital to Risk-Weighted Assets Ratio (CRAR) and safeguard SIDBI’s credit rating.
  • CRAR Benchmarks: The phased infusion will enable SIDBI to maintain CRAR above 10.50% under high-stress scenarios and above 14.50% under Pillar 1 and Pillar 2 norms over the next three years.