January 21, 2026 : The Union Cabinet, chaired by Narendra Modi, on Wednesday approved a ₹5,000 crore equity infusion into the Small Industries Development Bank of India (SIDBI) to strengthen the flow of credit to micro, small and medium enterprises.
The capital will be infused by the Department of Financial Services in three phases. Of the total amount, ₹3,000 crore will be provided in 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 equal instalments of ₹1,000 crore each in 2026–27 and 2027–28, based on the book value as on March 31 of the preceding financial years.
According to the government, the equity support will help SIDBI scale up its lending capacity and raise additional funds at competitive rates, allowing it to offer more affordable credit to MSMEs across the country.
With the infusion, the number of MSMEs supported by SIDBI is projected to increase from 76.26 lakh at the end of 2025 to around 102 lakh by 2028. This means nearly 25.74 lakh additional enterprises are expected to gain access to institutional finance over the next few years.
Official data from the Ministry of MSME shows that about 6.90 crore MSMEs currently provide employment to nearly 30.16 crore people, averaging just over four jobs per enterprise. On this basis, the expanded outreach of SIDBI could generate employment for roughly 1.12 crore people by the end of 2027–28.
The Cabinet noted that SIDBI’s risk-weighted assets are likely to rise sharply in the coming years due to a stronger focus on directed lending, digital and collateral-free credit products, and venture debt support for startups. To safeguard its credit profile and maintain regulatory capital norms, the bank will need additional equity.
The phased capital infusion is expected to help SIDBI maintain a capital to risk-weighted assets ratio above 10.5 per cent even under stress conditions, and above 14.5 per cent under Pillar 1 and Pillar 2 norms over the next three years.
The government said the move will strengthen SIDBI’s balance sheet and reinforce its role in supporting MSMEs with timely and competitively priced credit.
