SIDBI To Raise INR 10,000 Crore To Expand Equity Capital As per reports, the central government owns 20.8% in Sidbi, while State Bank of India holds 15.65% and Life Insurance Corporation 13.33%

Small Industries Development Bank of India (Sidbi) chairman and managing director Sivasubramanian Ramann, said the SME loan's refinancer is eyeing to float a INR 10,000 crore rights issue next fiscal to expand its equity capital as it expects to grow assets to INR 5 lakh crore by March 2024 from about INR 4 lakh crore in March 2023, according to a PTI report.

"The proposed rights issue will be carried out in two tranches of INR 5,000 crore each next fiscal to expand its capital base by INR10,000 crore and support the growing balance sheet, which is expected to rise by a quarter from the present," said the chairman in a statement.

The report further stated that the central government owns 20.8% in Sidbi, while State Bank of India holds 15.65% and Life Insurance Corporation 13.33%. The rest of the equity is held by other public financial institutions and banks. The shareholders will subscribe to the proposed rights issue.

"We recently had moved the department of financial services seeking to raise capital. Following this they moved the standing committee of Parliament which has suggested a capital support of INR 10,000 crore to us next fiscal so to provide us with more lending support to SMEs," said Ramann.

According to the annual report that stated the fall to the effective capital utilisation to increase the portfolio of the bank, Sidbi's capital adequacy ratio (CAR) came down to 19.29% in FY23 from 24.28% in FY22.

On the rising direct lending level, Ramann told PTI, the share of refinancing is still about 86% now, and that of direct lending is 14%, but he expects the share of direct lending to grow to 25% over the next three years.

As per RBI, the SME loan book of commercial banks as of March 2023 stood at INR 25 lakh crore, while the total credit market stood at a little over INR 145 lakh crore.