India Business Journal - SIDBI set to get Rs 5,000-crore equity infusion from government to boost credit flow

MONEY

SIDBI set to get Rs 5,000-crore equity infusion from government to boost credit flow

IBJ Bureau
Jan 22, 2026

The Union Cabinet has approved an equity infusion of Rs 5,000 crore into Small Industries Development Bank of India (SIDBI) to strengthen flow of credit to the micro, small and medium enterprises (MSME) sector.

The capital support will be provided by the Department of Financial Services under the Union Finance Ministry in a phased manner over three financial years. Of the total, Rs 3,000 crore will be infused in FY26 at a book value of Rs 568.65 per share as on March 31, 2025.

This will be followed by Rs 1,000 crore each in FY27 and FY28, calculated at the book value as on March 31 of the preceding financial year.

The government has said that the infusion is expected to expand SIDBI’s lending portfolio significantly over the next five years, making stronger capital buffers necessary to maintain a healthy Capital to Risk-Weighted Assets Ratio (CRAR).

Official estimates suggest that the additional capital will enable SIDBI to maintain a CRAR of over 10.50 per cent even under high-stress scenarios and above 14.50 per cent under normal pillar-I and pillar-II requirements over the next three years.

A strong CRAR is crucial for protecting SIDBI’s credit rating, enabling it to raise funds at competitive rates and pass on the benefit of cheaper credit to MSMEs.

Following the infusion, the number of MSMEs receiving financial assistance from SIDBI is projected to rise from 76.2 lakhs at the end of FY25 to around 1.02 crores by the end of FY28, an addition of nearly 25.74 lakh beneficiaries.