Bhubaneswar: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved an equity infusion of ₹5,000 crore into the Small Industries Development Bank of India (SIDBI) to enhance credit availability for the Micro, Small and Medium Enterprises (MSME) sector.
The equity support will be provided by the Department of Financial Services (DFS) in a phased manner over three financial years. Of the total amount, ₹3,000 crore will be infused in FY 2025–26 at a book value of ₹568.65 per share as on March 31, 2025. The remaining ₹2,000 crore will be infused in two tranches of ₹1,000 crore each in FY 2026–27 and FY 2027–28, based on the book value as on March 31 of the respective preceding financial years.
Following the capital infusion, the number of MSMEs receiving financial assistance from SIDBI is expected to increase from 76.26 lakh at the end of FY 2025 to about 1.02 crore by the end of FY 2028. This would result in the addition of approximately 25.74 lakh new MSME beneficiaries.
According to the latest data from the Ministry of MSME, 6.90 crore MSMEs generate employment for around 30.16 crore people, averaging 4.37 jobs per enterprise. Based on this average, the expansion in SIDBI-supported MSMEs is estimated to generate about 1.12 crore additional jobs by the end of FY 2027–28.
The government said SIDBI’s risk-weighted assets are expected to rise significantly over the next five years due to increased directed lending, expansion of digital and collateral-free credit products, and venture debt support for start-ups. This growth requires additional capital to maintain a healthy Capital to Risk-Weighted Assets Ratio (CRAR).
The equity infusion will help SIDBI maintain CRAR levels above 10.5 per cent under high-stress scenarios and above 14.5 per cent under regulatory requirements over the next three years. Maintaining a strong capital base is expected to protect SIDBI’s credit rating and enable it to raise funds at competitive interest rates, thereby improving credit flow to MSMEs at affordable costs.
-OdishaAge
