Finance Minister Nirmala Sitharaman has urged Indian banks to deepen their engagement with micro, small and medium enterprises (MSMEs) and forge stronger ties with non-banking financial companies (NBFCs), positioning financial institutions as critical engines of growth in a volatile global environment.
Speaking at the Bank of Maharashtra’s 91st Foundation Day event in Pune, the Finance Minister highlighted India’s macroeconomic resilience amid rising global headwinds, while underlining the need for a more inclusive, customer-focused banking approach.
India’s resilience and economic fundamentals praised
Sitharaman attributed India’s economic stability to strong macroeconomic fundamentals, robust domestic demand, and a young population. “The uncertainty in the global environment has only increased. The impact is being felt across multiple countries. India’s resilience stands out,” she said.
Referring to India’s recent GDP performance, she noted, “Our GDP increased to 7.8% in the April–June quarter. This shows our economy’s growing strength.”
She also praised the performance of public sector banks (PSBs), citing improved global ratings as evidence of their financial health and governance. “Over the last few years, India and its economic advisors have relooked at what the fundamentals are. As a result, you can see the ratings going up. The performance of our banks stands out particularly well,” Sitharaman added.
MSMEs need focused financial support
The Finance Minister voiced her full support for increasing MSME lending, stating, “I stand with the DFS Secretary’s advice to concentrate more and lend more to MSMEs.”
M. Nagaraju, Secretary of the Department of Financial Services (DFS), echoed her sentiment, stating that PSBs have overtaken private sector banks in credit disbursement for the first time in 2025, positioning them as key players in India’s financial inclusion journey.
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“Retail lending is important, but not sufficient. MSMEs, agriculture, women entrepreneurs, and corporates need greater support,” Nagaraju said, adding that banks must also streamline the customer experience across loan segments.
PSB–NBFC partnerships seen as next step for inclusive finance
Sitharaman called for an institutionalised model of collaboration between PSBs and NBFCs to better serve underserved markets, especially in semi-urban and rural regions. Enhanced coordination between these players can unlock new channels of credit delivery, she said.
With MSMEs forming the backbone of India’s industrial and employment landscape, stakeholders believe this renewed focus on financial access and seamless service delivery can significantly boost productivity and entrepreneurial growth.
As India aims to consolidate its position as the fastest-growing major economy, inclusive lending and strong NBFC–bank linkages are expected to play a pivotal role in sustaining growth momentum and supporting MSMEs through uncertain times.