The Union Cabinet has approved an equity infusion of Rs 50 billion into the Small Industries Development Bank of India to expand the availability of credit for micro, small and medium enterprises.

The capital infusion will be carried out by the Department of Financial Services in three tranches. Of the total amount, Rs 30 billion will be infused in FY26 at a book value of Rs 568.65 as on 31 March 2025, while Rs 10 billion each will be infused in FY27 and FY28 at the book value prevailing at the end of the respective previous financial year.

Following the capital infusion, the number of MSMEs receiving financial assistance is expected to increase from 7.63 million at the end of FY25 to 10.2 million by the end of FY28, with around 2.57 million new MSME beneficiaries added during the period, the government said.

Official data shows that, as of 30 September 2025, around 69 million MSMEs registered with the government employ 301.6 million people, translating into an average employment generation of 4.37 persons per enterprise. Based on this average, the addition of new MSME beneficiaries is estimated to generate employment for around 11.2 million people by FY28.

The government said the additional capital infusion is necessary to help SIDBI maintain a strong capital to risk-weighted assets ratio, as its risk-weighted assets are expected to rise with increased lending to MSMEs. A healthy capital adequacy position, well above the mandated level, is considered critical for protecting credit ratings and ensuring sustainable growth.

The infusion of additional share capital is expected to enable SIDBI to raise resources at competitive interest rates, thereby increasing the flow of affordable credit to MSMEs and strengthening the overall financing ecosystem.