At a key address in Pune, the Finance Minister urged India’s banking sector to become a proactive engine of growth amidst global uncertainty, emphasizing strong balance sheets, professional governance, and customer first policies
PUNE, On Thursday, September 25, 2025, Union Finance Minister Nirmala Sitharaman delivered an important speech that laid out the direction for India’s financial sector. Speaking at the 91st Foundation Day of the Bank of Maharashtra in Pune, she urged banks to strengthen their role as drivers of economic growth. She called on financial institutions with strong balance sheets to substantially increase lending to crucial sectors, including public infrastructure, industries, and Micro, Small, and Medium Enterprises (MSMEs).
Sitharaman’s comments come during a time of global uncertainty, where geopolitical tensions and unstable markets are affecting economies worldwide. She pointed out India’s economic stability, noting the strong macroeconomic fundamentals, a young population, and a high reliance on domestic demand. She mentioned that India’s GDP grew by 7.8% in the April-June quarter, showing the country’s ability to handle external challenges.
The global environment has become increasingly unpredictable,” Sitharaman said. “In this situation, the role of banks is even more crucial. They are not just guardians of savings but are also essential for building national infrastructure and supporting MSMEs.”
The Mandate for Increased Lending
The focus of her message was a clear directive for banks to look beyond traditional retail lending and actively finance projects that are important for the country.
Public Infrastructure: Sitharaman emphasized the need for significant investments in public infrastructure projects, which she described as the foundation of India’s long-term growth. Banks are expected to provide the necessary capital for these large projects.
MSMEs and Innovation: Highlighting the MSME sector as a “second engine of development,” the Finance Minister urged a greater flow of credit to these businesses. She also stressed the importance of lending for innovation and the adoption of technology within these small and medium-sized enterprises. This aligns with the government’s larger goal of a digital-first, self-reliant India. For more on how this sector is changing, read our analysis in the India News section.
The Pillars of a Strong Banking Sector
In addition to lending, Sitharaman’s speech addressed two other key areas for India’s banking system: governance and customer focus.
Professional Governance: The Finance Minister praised the recovery of public sector banks, which shifted from a period of high non-performing assets (NPAs) to achieving a record combined net profit of ₹1.78 lakh crore in the fiscal year ending March 2025. She credited this success to professional management and a move away from the legacy of poor governance associated with “phone banking.”
Customer Centric Approach: Sitharaman emphasized that customer trust is vital in banking. “Every complaint should be viewed as an opportunity to improve, innovate, and build trust,” she stated. She called for a system where addressing complaints is paired with an analysis of root causes to prevent them from happening again. This focus on customer experience is especially crucial for gaining and keeping the trust of India’s large youth population. For further insights on how technology is transforming customer service, see our insights in the Technology section.
The Finance Minister’s address, attended by Financial Services Secretary M. Nagaraju, clearly calls for India’s banking sector to take on a role beyond being financial intermediaries. They are now expected to become strategic partners in the country’s journey toward economic resilience and sustained growth, especially amid an unpredictable global economy.
