MSME Sector Gets a Lifeline! Govt Clears Rs.5,000 Crore Equity Infusion for SIDBI. The Union Cabinet approved a phased Rs 5,000 crore equity infusion into Small Industries Development Bank of India (SIDBI) on January 20, 2026, to strengthen its capital base and enhance credit flow to micro, small, and medium enterprises.
₹ 5,000 Cr Equity for SIDBI Approved Details
Chaired by Prime Minister Narendra Modi, the decision provides capital support via the Department of Financial Services in three tranches: Rs 3,000 crore in FY26 (at Rs 568.65 per share book value as of March 31, 2025), followed by Rs 1,000 crore each in FY27 and FY28.
This infusion addresses rising risk-weighted assets from SIDBI’s expansion into collateral-free digital lending, venture debt for startups, and directed credit initiatives.
Maintains SIDBI’s Capital to Risk-Weighted Assets Ratio (CRAR) above 10.5% under stress scenarios and over 14.5% under regulatory pillars for the next three years.
Boost to MSME Lending
Enables SIDBI to raise funds at competitive rates, passing benefits to MSMEs through affordable credit, supporting growth, innovation, and job creation.
Expected to increase MSMEs receiving financial assistance from 76.26 lakh (end of FY25) to about 1.02 crore by FY28, adding roughly 25.74 lakh new beneficiaries.
With India’s 6.90 crore MSMEs employing over 300 million (avg. 4.37 persons per unit), this could generate around 1.12 crore new jobs by FY28.
Strategic Importance
Protects SIDBI’s credit rating, allowing resource mobilization at fair interest rates amid push for digital and collateral-free products.
Aligns with government priorities for MSME revival, crucial for India’s economy as they contribute significantly to GDP, exports, and employment.
Builds on prior efforts, positioning SIDBI to scale lending capacity amid economic recovery in 2026.
