NewzVille Desk
The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved an equity support of Rs 5,000 crore to the Small Industries Development Bank of India (SIDBI).
The equity will be infused by the Department of Financial Services (DFS) in three tranches: Rs 3,000 crore in FY 2025-26 at the book value of Rs 568.65 as on March 31, 2025, and Rs 1,000 crore each in FY 2026-27 and FY 2027-28 at the respective previous year’s book values.
Post infusion, the number of MSMEs expected to receive financial assistance will rise from 76.26 lakh at the end of FY 2025 to approximately 102 lakh by FY 2028, adding around 25.74 lakh new beneficiaries.
Based on the latest data from the Ministry of MSME, 6.90 crore MSMEs generate employment for 30.16 crore people, averaging 4.37 persons per enterprise. This expansion is projected to create employment for an estimated 1.12 crore people by FY 2027-28.
With a growing portfolio and expansion of digital, collateral-free credit products and venture debt for start-ups, SIDBI’s risk-weighted assets are expected to increase.
The equity infusion will help maintain a healthy Capital to Risk-weighted Assets Ratio (CRAR) above 10.50% under high-stress scenarios and above 14.50% under Pillar 1 and Pillar 2 requirements over the next three years.
Maintaining a strong CRAR will protect SIDBI’s credit rating, enable it to raise resources at fair interest rates, and increase the flow of credit to MSMEs at competitive costs.
