The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved an equity infusion of Rs 50 billion into the Small Industries Development Bank of India (SIDBI) to strengthen its capital base and enhance credit flow to micro, small and medium enterprises (MSMEs).The equity support will be provided by the Department of Financial Services (DFS) in a phased manner over three financial years. Of the total amount, Rs 30 billion will be infused in FY 2025–26 at the book value of Rs 568.65 per share as on March 31, 2025. The remaining Rs 20 billion will be infused in two equal tranches of Rs 10 billion each in FY 2026–27 and FY 2027–28, at the book value as on March 31 of the respective preceding financial years.Following the equity infusion, the number of MSMEs receiving financial assistance from SIDBI is expected to rise significantly. Beneficiary coverage is projected to increase from 76.26 lakh at the end of FY 2025 to around 102 lakh by the end of FY 2028, translating into approximately 25.74 lakh new MSME beneficiaries. Based on official data from the Ministry of MSME, which indicates that 60.90 million MSMEs generate employment for 300.16 million people, the additional beneficiaries are estimated to generate around 10.12 million new jobs by the end of FY 2027–28.The capital infusion comes against the backdrop of a projected rise in SIDBI’s risk-weighted assets due to its expanding portfolio of directed credit, digital and collateral-free lending products, and venture debt support for start-ups. Maintaining a strong Capital to Risk-weighted Assets Ratio (CRAR) is critical to sustaining SIDBI’s credit rating and borrowing capacity.The additional equity will help SIDBI maintain CRAR above 10.50 per cent under high-stress scenarios and above 14.50 per cent under Pillar 1 and Pillar 2 norms over the next three years. This, in turn, is expected to enable the institution to raise funds at competitive rates and further strengthen credit availability for MSMEs across the country.