Cabinet Clears ₹5,000 Crore Boost for SIDBI to Power MSMEs and Job Creation
Equity infusion to strengthen credit flow, support startups, and fuel employment growth
In a major push for India’s small business ecosystem, the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved an equity infusion of ₹5,000 crore into the Small Industries Development Bank of India (SIDBI). The move is aimed at strengthening the bank’s financial position and sharply increasing the flow of affordable credit to Micro, Small and Medium Enterprises (MSMEs) across the country.
Phased Capital Infusion to Strengthen SIDBI
The capital support will be infused by the Department of Financial Services in a phased manner. SIDBI will receive ₹3,000 crore in the financial year 2025–26, followed by ₹1,000 crore each in the subsequent two years. This staggered approach is designed to ensure long-term financial stability while allowing the development bank to scale up lending operations efficiently.
More Credit, More MSMEs Covered
According to the Union Finance Ministry, the infusion will enable SIDBI to raise additional funds at competitive rates, directly improving credit availability for MSMEs. “Flow of credit to MSMEs will increase as SIDBI will be able to generate additional resources at competitive rates,” the ministry said.
The government expects the number of MSMEs supported by SIDBI to rise from 76.26 lakh to around 102 lakh by the end of FY2028. This translates into nearly 25.74 lakh new MSME beneficiaries gaining access to formal finance over the next few years.
Big Push for Jobs and Economic Growth
Beyond business expansion, the move is expected to deliver a significant employment boost. Based on current trends in MSME-driven job creation, the government estimates that the enhanced credit flow could help generate about 1.12 crore new jobs. As MSMEs remain the backbone of India’s employment landscape, this support could have far-reaching social and economic benefits.
Preparing SIDBI for the Future
The equity infusion also positions SIDBI to meet future challenges. As the bank expands into digital, collateral-free lending products and venture debt for startups, maintaining a strong capital base is critical. The government noted that the phased equity support would help SIDBI maintain a Capital to Risk-Weighted Assets Ratio (CRAR) above 10.50% even under high-stress scenarios.
A Vote of Confidence in Small Businesses
Overall, the Cabinet’s decision sends a strong positive signal to India’s MSME sector. By reinforcing SIDBI’s balance sheet, the government is not just providing financial support to a bank, but investing in entrepreneurs, job creators, and the long-term growth engine of the Indian economy.
(This article has been syndicated from ANI)
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