Growth, Profitability and Asset Quality in India's MSME Development Finance: A Long-Term Financial Review of SIDBI (Asian Journal of Management and Commerce)

Summary

• SIDBI reported gross advances of ₹136,805.74 crore and profit after tax of ₹1,952.21 crore in FY2018–19.p.6
• Profit after tax grew to ₹4,810.74 crore in FY2024–25, representing a 146.4% total increase and a CAGR of 16.2%.p.6
• The Capital Adequacy Ratio declined from 27.11% in FY2018–19 to 15.94% in FY2023–24, before recovering to 19.62% in FY2024–25.p.7
• Gross Non-Performing Assets dropped to a low of ₹33.35 crore (0.01%) in FY2022–23 before rising to ₹182.89 crore (0.04%) in FY2024–25.p.7
• SIDBI's Return on Assets decreased from 1.43% to 0.89% over the reviewed period.p.8

Key insights

1. Profit after tax steadily expanded over the long term, moving from ₹1,952.21 crore to ₹4,810.74 crore.p.6
2. Advances expanded faster than profit after tax, leading to a general decline in return on assets.p.6
3. The Capital Adequacy Ratio registered an overall drop of 7.49 percentage points between FY2018–19 and FY2024–25.p.7
4. Gross Non-Performing Assets reached their lowest point of 0.01% in FY2022–23 before turning upward in FY2023–24 and FY2024–25.p.7
5. Net Interest Margin fluctuated significantly across the seven-year period before settling below initial levels.p.8
6. Data discrepancies exist between SIDBI annual reports and government dashboards that require reconciliation.p.1