New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, approved SIDBI equity support of Rs.5,000 crore to strengthen lending capacity for micro, small and medium enterprises, an official statement said on January 21.
The approved equity support will be infused into Small Industries Development Bank of India by the Department of Financial Services in three tranches. Of the total amount, Rs.3,000 crore will be provided in the 2025–26 financial year at a book value of Rs.568.65 per share as on March 31, 2025. The remaining Rs.2,000 crore will be infused as Rs.1,000 crore each in 2026–27 and 2027–28 at the book value as on March 31 of the respective preceding financial years.
The Cabinet decision is expected to significantly raise the flow of institutional credit to MSMEs. With higher equity capital, SIDBI will be able to mobilise additional resources at competitive interest rates and on-lend them at lower cost to small businesses.
The government said that following the equity infusion, the number of MSMEs receiving financial assistance from SIDBI is projected to rise from 76.26 lakh at the end of 2025 to 102 lakh by the end of 2028. This implies the addition of approximately 25.74 lakh new MSME beneficiaries over the period.
SIDBI equity support to strengthen capital and employment impact
Based on official MSME ministry data as of September 30, 2025, about 6.90 crore MSMEs generated employment for 30.16 crore people nationwide. Using the average employment generation of 4.37 persons per MSME, the government estimated that the addition of 25.74 lakh new beneficiaries could create around 1.12 crore jobs by the end of 2027–28.
Explaining the rationale, the statement said SIDBI’s risk-weighted assets were expected to increase sharply over the next five years due to directed credit expansion, digital and collateral-free loan products, and venture debt for start-ups. These factors would require higher capital to maintain a healthy Capital to Risk-weighted Assets Ratio.
The equity infusion, to be provided in a phased manner, is aimed at keeping SIDBI’s CRAR above 10.50% even under high-stress conditions and above 14.50% under Pillar 1 and Pillar 2 norms over the next three years. A strong capital position, the government said, would help protect SIDBI’s credit rating and ensure sustained credit flow to MSMEs at competitive rates.
