Landmark step towards Viksit Bharat: Modi govt approves ₹5,000 crore equity infusion into SIDBI to enhance MSME credit, create job opportunities for youth
The central government has made a significant decision to enhance the MSME sector. On 21st January (Wednesday), an equity infusion of ₹5,000 crore into the Small Industries Development Bank of India (SIDBI) was sanctioned, intending to bolster its financial standing. The move will also enable easier alongside more affordable access to credit for micro, small and medium enterprises (MSMEs) throughout the nation with the aim to generate new job opportunities. Prime Minister Narendra Modi also took to social media to inform about the pivotal decision and remarked, “Today’s cabinet decision relating to providing equity support to Small Industries Development Bank of India (SIDBI) will benefit countless MSMEs thus contributing to a Viksit Bharat.” Today’s Cabinet decision relating to providing equity support to Small Industries Development Bank of India (SIDBI) will benefit countless MSMEs thus contributing to a Viksit Bharat. https://t.co/FASjgbT1sB— Narendra Modi (@narendramodi) January 21, 2026 The massive investment is going to transpire in three separate phases. The initial phase will see an investment of ₹3,000 crore in FY (Fiscal Year) 2025-26 followed by two subsequent phases, each contributing ₹1,000 crore in 2026-27 and 2027-28. The infusion of this capital will be determined by SIDBI’s book value, thereby increasing the bank’s equity and equipping it to address future requirements. The MSME sector will be the primary beneficiary of this equity support. A notable rise in the number of MSMEs receiving monetary aid from SIDBI is anticipated in the upcoming years. This figure stands at approximately 7.5 crore at present but it is projected to grow by over 25 lakh new MSMEs by 2027-28. This development will further improve access to formal banking and financial services for small entrepreneurs. The MSME sector is recognised as the largest job provider in the nation. Statistics indicated that it usually employs between four and five individuals. Hence, it is expected that the inclusion of around 25.74 lakh new MSME beneficiaries could result in the creation of approximately 1.12 crore new jobs. This implies that this program could create new job offers for millions of young individuals. SIDBI’s loan portfolio will likely expand substantially in the forthcoming years, particularly due to targeted lending, digital loans and venture loans given to startups. This growth will also contribute to a spike in risk-weighted assets. Therefore, it is essential to uphold a robust Capital-to-Risk Weighted Assets Ratio (CRAR). The additional equity capital will assist SIDBI in addressing this challenge. The decision will strengthen SIDBI’s credit rating, making it easier for the institution to raise funds from the market at lower interest rates. This will directly benefit MSMEs as they will also be able to access loans at reduced interest rates. The government believes that this phased equity investment will enable SIDBI to maintain its capital adequacy ratio above safe levels for the next three years even under stressful conditions. Overall, this ₹5,000 crore equity infusion into SIDBI is part of the government’s larger strategy to make the MSME sector a strong pillar of India’s economic growth. This decision will not only empower industries but also accelerate progress towards the goal of a “Developed India” through job creation.
The central government has made a significant decision to enhance the MSME sector. On 21st January (Wednesday), an equity infusion of ₹5,000 crore into the Small Industries Development Bank of India (SIDBI) was sanctioned, intending to bolster its financial standing. The move will also enable easier alongside more affordable access to credit for micro, small and medium enterprises (MSMEs) throughout the nation with the aim to generate new job opportunities.
Prime Minister Narendra Modi also took to social media to inform about the pivotal decision and remarked, “Today’s cabinet decision relating to providing equity support to Small Industries Development Bank of India (SIDBI) will benefit countless MSMEs thus contributing to a Viksit Bharat.”
Today’s Cabinet decision relating to providing equity support to Small Industries Development Bank of India (SIDBI) will benefit countless MSMEs thus contributing to a Viksit Bharat. https://t.co/FASjgbT1sB
— Narendra Modi (@narendramodi) January 21, 2026
The massive investment is going to transpire in three separate phases. The initial phase will see an investment of ₹3,000 crore in FY (Fiscal Year) 2025-26 followed by two subsequent phases, each contributing ₹1,000 crore in 2026-27 and 2027-28. The infusion of this capital will be determined by SIDBI’s book value, thereby increasing the bank’s equity and equipping it to address future requirements.
The MSME sector will be the primary beneficiary of this equity support. A notable rise in the number of MSMEs receiving monetary aid from SIDBI is anticipated in the upcoming years. This figure stands at approximately 7.5 crore at present but it is projected to grow by over 25 lakh new MSMEs by 2027-28. This development will further improve access to formal banking and financial services for small entrepreneurs.
The MSME sector is recognised as the largest job provider in the nation. Statistics indicated that it usually employs between four and five individuals. Hence, it is expected that the inclusion of around 25.74 lakh new MSME beneficiaries could result in the creation of approximately 1.12 crore new jobs. This implies that this program could create new job offers for millions of young individuals.
SIDBI’s loan portfolio will likely expand substantially in the forthcoming years, particularly due to targeted lending, digital loans and venture loans given to startups. This growth will also contribute to a spike in risk-weighted assets. Therefore, it is essential to uphold a robust Capital-to-Risk Weighted Assets Ratio (CRAR). The additional equity capital will assist SIDBI in addressing this challenge.
The decision will strengthen SIDBI’s credit rating, making it easier for the institution to raise funds from the market at lower interest rates. This will directly benefit MSMEs as they will also be able to access loans at reduced interest rates. The government believes that this phased equity investment will enable SIDBI to maintain its capital adequacy ratio above safe levels for the next three years even under stressful conditions.
Overall, this ₹5,000 crore equity infusion into SIDBI is part of the government’s larger strategy to make the MSME sector a strong pillar of India’s economic growth. This decision will not only empower industries but also accelerate progress towards the goal of a “Developed India” through job creation.
