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Source — Source: TH ///Category — GS Paper 2 ///Published — 2026-01-29 ///Exam — Both Prelims and Mains ///Tags — Rapid Fire CA, Quick Facts For Prelims, GS Paper - 2 ///Source — Source: TH ///Category — GS Paper 2 ///Published — 2026-01-29 ///Exam — Both Prelims and Mains ///Tags — Rapid Fire CA, Quick Facts For Prelims, GS Paper - 2 ///

Source: TH · GS Paper 2

Equity Infusion into SIDBI

The Union Cabinet has approved a Rs 5,000 crore equity infusion into SIDBI over three years to boost credit flow to MSMEs, aiming to increase beneficiaries from 76.26 lakh to 102 lakh by FY28 and generate about 1.12 crore jobs. This move strengthens SIDBI’s capital base, supports financial inclusion, and aligns with broader MSME development policies.

2026-01-29

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Source: TH

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Key Facts & Data Points

Equity infusion: ₹5,000 crore over 3 years approved by Union Cabinet.
Target beneficiaries: Increase MSME beneficiaries from 76.26 lakh (FY25) to ≈102 lakh (FY28) – addition of ≈25.74 lakh MSMEs.
Employment impact: New beneficiaries expected to generate ≈1.12 crore jobs by FY27‑28 (average 4.37 persons per unit).
CRAR: Capital infusion will bolster SIDBI’s Capital to Risk‑Weighted Assets Ratio (CRAR) amid rising risk‑weighted assets.

Background & Context

SIDBI – Apex financial institution for MSME financing, established under the Small Industries Development Bank of India Act, 1989.
Operates under the Ministry of Finance and is one of the five All‑India Financial Institutions (AIFIs) regulated by the Reserve Bank of India (RBI).
Core mandate: Promotion, financing and development of MSMEs through refinancing, direct loans, credit guarantees, and capacity‑building initiatives.

Significance for India / Governance / Policy

Financial inclusion: Strengthens credit flow to the MSME sector, which contributes ~30% of India’s GDP and employs ~6.9 crore people.
Resource mobilization: Enhances SIDBI’s capital base, enabling higher lending and risk‑mitigation capacity.
Policy alignment: Supports government initiatives such as Production‑Linked Incentive (PLI) schemes and digital credit platforms.
Economic impact: Job creation and entrepreneurship promotion aid in achieving inclusive growth and reducing unemployment.

Related Constitutional / Legal Provisions

Small Industries Development Bank of India Act, 1989 – statutory basis for SIDBI.
RBI’s regulatory framework for AIFIs under the Banking Regulation Act, 1949.
Alignment with National Policy on MSMEs (2020) and Finance Ministry’s MSME Development Strategy.

Other AIFIs Regulated by RBI

Export‑Import Bank of India (EXIM Bank)
National Bank for Agriculture and Rural Development (NABARD)
National Housing Bank (NHB)
National Bank for Financing Infrastructure and Development (NaBFID)