Cabinet clears ₹5,000 cr equity infusion into Sidbi to boost MSME credit

The equity infusion into Sidbi will be provided over three years to strengthen its capital base and expand credit flow to MSMEs, with support expected to reach 2.6 million additional units by FY28

The Union Cabinet on Wednesday announced an equity infusion of ₹5,000 crore into the Small Industries Development Bank of India (Sidbi), aimed at expanding credit to micro, small and medium enterprises (MSMEs).

 

The capital will be infused by the Department of Financial Services in three tranches. Of the total amount, ₹3,000 crore will be provided in the financial year 2025–26 (FY26) at a book value of ₹568.65 per share as of March 31, 2025, the Ministry of Finance said. The remaining ₹2,000 crore will be infused in equal tranches of ₹1,000 crore each in FY27 and FY28, based on the book value as of March 31 of the preceding financial year, it added.

Equity support to help 2.6 million MSMEs

Following the infusion, the ministry said that the number of MSMEs receiving financial assistance from Sidbi is expected to rise to about 10.2 million by the end of FY28, from 7.63 million at the end of FY25.

 

Based on official MSME ministry data as of September 30, 2025, around 69 million MSMEs together generate employment for about 301.6 million people, translating to an average of 4.37 jobs per enterprise. "Considering this average, employment generation is estimated to be 11.2 million with the expected addition of 2.6 million new MSME beneficiaries by the end of FY28," the ministry said.

Why it matters?

The ministry said the capital support is needed as Sidbi’s risk-weighted assets are expected to rise due to a push towards directed credit, digital and collateral-free lending products, and venture debt for start-ups. These activities require higher capital to maintain a healthy capital to risk-weighted assets ratio (CRAR) and protect the institution’s credit rating.

 

"Sidbi will benefit from an infusion of additional share capital by maintaining a healthy CRAR. This infusion of additional capital would enable Sidbi to generate resources at fair interest rates, thereby increasing the flow of credit to MSMEs at competitive cost," the ministry said.