The Union Cabinet, led by Prime Minister Narendra Modi, has sanctioned Rs 5,000 crore in equity support for the Small Industries Development Bank of India (SIDBI). This financial aid will be provided in three installments, with the Department of Financial Services infusing Rs 3,000 crore in the fiscal year 2025-26 and Rs 1,000 crore each in the subsequent two fiscal years.
Following the equity infusion of Rs 5,000 crore, the number of MSMEs receiving financial assistance is expected to rise from 76.26 lakh to 102 lakh by the end of the fiscal year 2028, benefitting around 25.74 lakh new MSME beneficiaries. The Ministry of MSME’s data as of September 30, 2025, shows that 6.90 crore MSMEs have generated employment for 3016 crore individuals, averaging 4.37 persons per MSME.
To support directed credit and anticipated portfolio growth over the next five years, SIDBI’s risk-weighted assets are projected to increase significantly. This growth necessitates higher capital to maintain a healthy Capital to Risk-weighted Assets Ratio (CRAR).
The development of digital collateral-free credit products and venture debt for startups by SIDBI is expected to further raise risk-weighted assets, requiring additional capital to ensure a robust CRAR. Maintaining a healthy CRAR is crucial for credit rating protection, and the additional share capital infusion will enable SIDBI to enhance credit flow to MSMEs at competitive costs.
By infusing equity in a phased manner, SIDBI aims to uphold a CRAR above 10.5% in high-stress scenarios and above 14.5% under Pillar 1 and Pillar 2 requirements over the next three years.
