THEBUSINESSBYTES
BUREAU
NEW
DELHI, JANUARY 21, 2026
In a major push to strengthen India’s micro,
small and medium enterprise ecosystem, the Union Cabinet chaired by Prime
Minister Narendra Modi on Wednesday approved an equity infusion of ₹5,000
crore into the Small Industries Development Bank of India (SIDBI). The capital
support, to be provided by the Department of Financial Services, will be
infused in a phased manner over three financial years, beginning with ₹3,000
crore in 2025–26, followed by ₹1,000 crore each in 2026–27 and 2027–28.
The initial tranche will be
infused at the book value of ₹568.65 per share as on March 31,
2025, while subsequent tranches will be based on the book value as on March 31
of the respective preceding financial years. The decision is aimed at
reinforcing SIDBI’s capital
base to support its expanding portfolio of directed credit, digital and
collateral-free lending products, and venture debt for start-ups.
The infusion is expected to
significantly expand SIDBI’s outreach. The number of MSMEs receiving financial
assistance is projected to rise from 76.26 lakh at the end of FY 2025 to about
1.02 crore by FY 2028, adding nearly 25.74 lakh new beneficiaries. Based on
official MSME data, which shows an average employment generation of 4.37
persons per enterprise, this expansion is estimated to create around 1.12 crore
additional jobs by the end of FY 2027–28.
The government noted that
SIDBI’s risk-weighted assets are expected to rise sharply over the next five
years due to increased credit flow, digital lending initiatives, and venture
debt exposure. This necessitates higher capital to maintain a healthy Capital
to Risk-weighted Assets Ratio and protect its credit rating. The staggered
equity infusion will enable SIDBI to keep its CRAR above 10.50 per cent even
under high-stress scenarios and above 14.50 per cent under Pillar 1 and Pillar
2 norms over the next three years.
