Cabinet approves US$ 600 million equity infusion into SIDBI to boost MSME credit
- IBEF
- January 22, 2026
According to a press release, the Union Cabinet, chaired by Prime Minister Mr. Narendra Modi, has approved an equity investment of Rs. 5,000 crore (US$ 600 million) in the Small Industries Development Bank of India (SIDBI). This investment will help the SIDBI provide more loans to micro, small and medium-sized enterprises (MSMEs). The money will be provided in three payments of Rs. 3,000 crore (US$ 360 million) in FY26, at a book value of Rs. 568.65 per share as of 31 March 2025, followed by Rs. 1,000 crore (US$ 120 million) in FY27 and FY28, at book values determined as of the preceding fiscal year. This will help strengthen SIDBI's capital position, allowing SIDBI to increase its ability to lend, attract lower-cost funds, and provide low-cost loan financing to many MSME businesses.
Following the capital infusion, the number of MSMEs receiving financial assistance from SIDBI is projected to rise significantly from 76.26 lakh at the end of FY25 to around 1.02 crore by the end of FY28, implying the addition of approximately 25.74 lakh new MSME beneficiaries. According to Ministry of MSME data, around 6.90 crore MSMEs currently generate employment for about 30.16 crore people, averaging 4.37 jobs per enterprise; the expanded credit support is expected to generate an estimated 1.12 crore new jobs by FY28. Additionally, with the focus of SIDBI changing to providing directed credit, digital and collateral-free loans, venture debt for start-ups will have higher risk-weighted assets (RWA) than normal for SIDBI and will need additional capital over the next five-year period to maintain the CRAR levels in a healthy range. Therefore, via the infusion of capital, SIDBI can maintain a strong credit rating and strengthen its balance sheet while enabling the provision of finance for MSMEs at competitive levels to support entrepreneurship and overall economic growth.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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