Equity Infusion into SIDBI | 29 Jan 2026

Source: TH 

The Union Cabinet has approved a Rs 5,000 crore equity infusion (over 3 years) into the Small Industries Development Bank of India (SIDBI) to enhance credit flow to Micro, Small, and Medium Enterprises (MSMEs). 

• Expected Reach: The infusion is projected to increase the number of MSME beneficiaries from 76.26 lakh (FY25) to 102 lakh by FY28, adding approximately 25.74 lakh new MSMEs. 
• Employment Generation: India’s ~6.9 crore MSMEs employ 30.16 crore people, averaging 4.37 persons per unit, with new beneficiaries expected to generate ~1.12 crore additional jobs by FY 2027–28. 
• Strong CRAR: Additional capital infusion will help SIDBI maintain a strong capital to risk-weighted assets ratio (CRAR), as risk-weighted assets are likely to rise with expanded MSME lending. 

SIDBI 

• About: SIDBI is the apex financial institution for promoting and coordinating MSME financing and development in India, operating under the Ministry of Finance. 
• Legal & Regulatory Framework: Established under the Small Industries Development Bank of India Act, 1989, it is one of the five All-India Financial Institutions (AIFIs) regulated by the RBI, with its headquarters in Lucknow. 
  • Other four AIFIs regulated by the RBI are the Export-Import Bank of India (EXIM Bank), the National Bank for Agriculture and Rural Development (NABARD), the National Housing Bank (NHB), and the National Bank for Financing Infrastructure and Development (NaBFID). 
• Core Mandate: To execute a triple agenda of promotion, financing, and development of MSMEs, focusing on access to capital, value chain integration, and sustainable growth. 
• Key Functions: SIDBI provides refinancing and direct financing—including term loans and working capital—to banks and MSMEs.  
  • It offers credit guarantee support and undertakes promotional activities like capacity building and fostering innovation.  
• Operational Role: It serves as the apex coordinating body for key government initiatives like production-linked incentive schemes and digital credit platforms.