The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the equity support of ₹5,000 crore to the Small Industries Development Bank of India (SIDBI).
The equity capital of ₹5,000 crore shall be infused into SIDBI by the Department of Financial Services (DFS) in three tranches — ₹3,000 crore in Financial Year 2025–26 at the book value of ₹568.65 as on 31.03.2025, followed by ₹1,000 crore each in Financial Years 2026–27 and 2027–28 at the book value as on 31st March of the respective previous financial year.
Post the equity capital infusion of ₹5,000 crore, the number of MSMEs receiving financial assistance is expected to rise from 76.26 lakh at the end of FY2025 to nearly 102 lakh by FY2028. This translates into the addition of approximately 25.74 lakh new MSME beneficiaries over the period.
As per the latest data (as on 30.09.2025) available from the Ministry of MSME, 6.90 crore MSMEs generate employment for 30.16 crore individuals, implying an average employment generation of 4.37 persons per MSME. Based on this metric, the expected addition of 25.74 lakh MSMEs could generate nearly 1.12 crore new jobs by the end of FY2027–28.
With a focus on directed credit and anticipated portfolio growth over the next five years, the risk-weighted assets (RWAs) on SIDBI’s balance sheet are projected to increase significantly. This expansion will require higher capital levels to sustain a stable Capital to Risk-Weighted Assets Ratio (CRAR).
The digital and digitally-enabled collateral-free credit products being developed by SIDBI, aimed at boosting MSME credit flow, along with venture debt support for start-ups, will further increase risk-weighted assets, thereby necessitating additional capital buffers to maintain a healthy CRAR.
A robust CRAR well above the mandated threshold is essential to safeguard SIDBI’s credit rating. The proposed additional equity infusion will strengthen SIDBI’s capital adequacy, ensuring resilience even under stress scenarios.
This phased equity infusion will allow 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.
By reinforcing its capital base, SIDBI will be able to raise resources at competitive interest rates, enabling increased credit flow to Micro, Small & Medium Enterprises (MSMEs) at affordable costs, further strengthening India’s MSME ecosystem.
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