The Union Cabinet on Wednesday approved an equity infusion of Rs 5,000 crore into the Small Industries Development Bank of India (SIDBI) to strengthen the flow of credit to the micro, small and medium enterprises (MSME) sector.
The capital support will be provided by the Department of Financial Services (DFS) under the finance ministry in a phased manner over three financial years. Of the total, Rs 3,000 crore will be infused in FY26 at a book value of Rs 568.65 per share, as on March 31, 2025.
This will be followed by Rs 1,000 crore each in FY27 and FY28, calculated at the book value as on March 31 of the preceding financial year.
Expanding Lending Portfolio
The government said the infusion is expected to significantly expand SIDBI’s lending portfolio over the next five years, making stronger capital buffers necessary to maintain a healthy Capital to Risk-weighted Assets Ratio (CRAR).
Official estimates suggest the additional capital will enable SIDBI to maintain a CRAR of over 10.50% even under high-stress scenarios and above 14.50%under normal Pillar I and Pillar II requirements over the next three years.
A strong CRAR is crucial for protecting SIDBI’s credit rating, enabling it to raise funds at competitive rates and pass on the benefit of cheaper credit to MSMEs.
Following the infusion, the number of MSMEs receiving financial assistance from SIDBI is projected to rise from 7.62 million at the end of FY25 to around 10.2 million by the end of FY28, an addition of nearly 25.74 lakh beneficiaries.
Driving Job Creation
According to the latest official data from the ministry of MSME, as on September 30, 2025, India’s 69 million MSMEs generate about 300.16 million jobs, with an average employment of 4.37 persons per enterprise.
Applying this ratio, the expected increase in SIDBI-supported MSMEs could lead to the creation of around 11.2 million additional jobs by the end of FY28, the government said.
The decision underlines the continued policy focus on the MSME sector, a key pillar of the Indian economy that contributes substantially to GDP, exports and employment.