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Opinion | A conflict-ridden SIDBI needs the government to clarify its role

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₹1.5 trillion comprises primarily refinance to financial institutions (about 90% of its portfolio), and then direct lending to MSMEs.

On the liabilities side, SIDBI raises significant resources from the priority sector shortfall (PSS) funds of banks, among others—these are fairly low-cost liabilities.

Now consider the credit demand of MSMEs in India. This credit gap (difference between formal supply and MSME demand) is estimated to be in a range of ₹20-25 trillion by the 2019 Report Of The Reserve Bank Of India Committee On MSMEs.

The big question is whether SIDBI’s resources are being used efficiently to close this credit gap. A large balance sheet is not a relevant metric for a development FI.

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