Business EconomyPosted at: Jan 21 2026 2:07PM


Cabinet clears Rs 5,000 cr equity infusion into SIDBI to boost MSME Credit

New Delhi, Jan 21 (UNI) The union Cabinet has approved an equity infusion of Rs 5,000 crore into the Small Industries Development Bank of India (SIDBI) to strengthen credit flow to the micro, small and medium enterprises (MSME) sector and support employment generation, an official statement said on Wednesday here.
The capital support will be provided by the Department of Financial Services in three tranches, with Rs 3,000 crore to be infused during the current financial year 2025–26, followed by Rs 1,000 crore each in 2026–27 and 2027–28.
The equity infusion will be made at the book value of SIDBI shares as of March 31 of the preceding financial years.
The additional capital is expected to significantly enhance SIDBI’s lending capacity, enabling the institution to extend affordable and timely credit to a larger number of MSMEs across the country.
SIDBI is the principal financial institution for the promotion, financing and development of MSMEs and plays a central role in implementing several government-backed credit initiatives.
As of the end of the previous financial year, more than 76 lakh MSMEs had received financial assistance through SIDBI.
With the expanded capital base, the number of beneficiary enterprises is projected to rise to over one crore by the end of the 2027–28 financial year.
The expansion in credit outreach is expected to support substantial employment generation, with estimates indicating that more than one crore additional jobs could be created through the newly supported enterprises.
The equity infusion will also help SIDBI maintain adequate capital adequacy levels as its risk-weighted assets increase.
The institution has been expanding into newer lending segments, including digital and collateral-free credit products, which require a stronger capital buffer to manage risks and comply with regulatory norms.
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