Cabinet approves equity support to Small Industries Development Bank of India

• 22 Jan 2026
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The Union Cabinet, led by PM Shri. Narendra Modi, has granted approval for an equity support of Rs.5,000 crore to Small Industries Development Bank of India (SIDBI). The Department of Financial Services shall infuse this amount into the Bank in three tranches, i.e., Rs.3,000 crore in Financial year 2025-26 at the book value of Rs.568.65/- as on 31.03.2025 and Rs.1,000 crore each in Financial Year 2026-27 and Financial year 2027-28 at the book value as on 31st March of the respective previous financial year.

Impact

After the equity capital infusion of Rs. 5000 cr. by the Department, the number of MSMEs to be provided financial assistance is expected to increase from 76.26 lakh at the end of Financial Year 2025 to 102 lakhs (approximately 25.74 lakh new MSME beneficiaries will be added) by the end of Financial Year 2028.  

According to the latest data available on the official website of MSME Ministry (as of 30.09.2025), 6.90 crore MSMEs generate 30.16 crore employment (i.e. employment generation of 4.37 persons per MSME). Taking this average into account, employment generation is estimated to be 1.12 crore with the expected addition of 25.74 lakh new MSME beneficiaries by the end of FY 2027-28.

Background

With an emphasis on directed credit and anticipated growth in that portfolio over the next five years, the risk-weighted assets on SIDBI’s balance sheet are projected to rise significantly. This increase will require more capital to maintain the same level of Capital to Risk-weighted Assets Ratio (CRAR). 

The digital and digitally-enabled collateral-free credit products being developed by SIDBI, intended to enhance credit flow, along with the venture debt being offered to start-ups, will further escalate the risk weighted assets. They will require an even greater amount of capital to achieve a healthy CRAR.

To protect the credit rating of SIDBI, maintaining a healthy CRAR significantly above the mandated level is of utmost importance. An infusion of additional share capital will allow SIDBI to sustain a healthy CRAR and enable the bank to generate resources at competitive interest rates. 

This, in turn, will increase the flow of credit to MSMEs at reasonable costs. The proposed equity infusion will occur in a staggered or phased manner and allow SIDBI to maintain a CRAR above 10.50% under high-stress scenarios and above 14.50% under Pillar 1 and Pillar 2 requirements over the next three years

Source: Press Information Bureau (PIB)