Banking industry plays key role in India’s growth story: President Droupadi Murmu

President of India Droupadi Murmu, on Tuesday (September 2, 2025), said the Indian economy is among the world’s fastest-growing large economies, and the banking industry plays a pivotal role in its growth story. She said banks can play an important role in transforming MSMEs into the engines of growth and urged the banking sector to prioritise empowerment of farmers and the rural economy.

Addressing during the 120^th foundation day celebrations of the City Union Bank (CUB) in Chennai, Ms. Murmu said that by providing timely and affordable credit, promoting financial literacy, and supporting agri-tech initiatives, the banking sector can make agriculture sustainable and profitable. The MSME sector is important for our economy, as it generates employment and drives innovation.

She said, in a dynamic economic landscape, the aspirations of people have expanded in a major way. The role of banks has expanded beyond financial transactions and they offer a variety of financial services, playing an instrumental role in inclusive and sustainable development. One of the critical pillars of the country’s development is financial inclusion. In a developing country like India, a large population still lives in rural and semi-urban areas with limited access to formal banking. “I am happy to note that City Union Bank has made remarkable progress in the field of financial inclusion. Out of its total network of branches across the country, over 50% of them are in rural and semi-urban areas,” she said.

The government of India has launched several key initiatives to boost financial inclusion. The Pradhan Mantri Jan Dhan Yojana (PMJDY) enabled the opening of over 56 crore zero-balance bank accounts. Through schemes like direct benefit transfer, subsidies and welfare benefits reach beneficiaries without leakage and intermediaries. Mobile banking and Unified Payments Interface (UPI) have facilitated digital transactions and strengthened the digital economy, Ms. Murmu said.

Crucial role in digital transformation, entrepreneurship

Payments banks, digital wallets, and banking correspondents have taken financial services to the doorsteps of people in remote villages. Despite progress in this area, several challenges are still faced in terms of digital literacy, internet access, and financial awareness. With combined efforts of all stakeholders, people can be better integrated with banking services through technology and digital and financial literacy, she said.

As our digital and knowledge-driven economy keeps expanding, the role of banks in digital transformation and entrepreneurship becomes even more crucial. From start-ups to smart cities, there is a whole range of areas where banks can contribute as active partners in building a developed India, she added.

Speaking at the event, Union Finance Minister Nirmala Sitharaman said private sector banks play a vital role in nation-building efforts. Indian Scheduled Commercial Banks have recorded a massive improvement in their asset quality. Their gross and net NPAs have come down to multi-decadal levels at 2.3% and 0.5% as of March 2025.

“The macro stress test that we do has shown such results that the Scheduled Commercial Banks’ aggregate capital levels will continue to remain above the regulatory minimum even under adverse stress scenarios. Strong and well-capitalised banks with near-record low NPAs mean cheaper, steadier credit for households, MSMEs and infrastructure, lower systemic risks, and sustained confidence in India’s financial system, supporting investments, job creation and growth while preserving the stability of industries even amid global downturns and uncertainties,” she said.

She said the Q1 real GDP registered a growth of 7.8%, beating all estimates and showing overall good momentum across various sectors. For the first time in 18 years, India’s long-term sovereign credit rating has been upgraded by Standard & Poor’s (S&P) Global Ratings.

The Finance Minister also said the inflation rates have registered a decline for nine consecutive months and reached an eight-year low of 1.55% in July 2025. The Employees’ Provident Fund Organisation recorded an all-time net addition of nearly 22 lakh members during June 2025, the second month in a row of record additions.

She said the PMJDY was a mission-mode service which the banks undertook in order to bring more people into the banking system. Over the past 11 years, more than 56 crore Jan Dhan accounts have been opened with a total deposit balance of 2.68 lakh crore. Of these accounts, 67% were opened in rural and semi-urban areas and women hold 56% of all Jan Dhan accounts.

GST reforms

She also said the planned roll-out of the next-generation GST reforms in the coming months will make the economy more open and transparent, with further reduction in compliance burden, making it easier for small businesses to thrive.

She urged banks to not only expand credit but also provide momentum for infrastructure development, ensure timely and need-based funding for MSMEs, bring the unbanked into the fold of formal banking, and meet diverse requirements where the support of banking channels is vital, with trust, technology and transparency being the guiding principles for this transformation.

In his welcome address, N. Kamakodi, Managing Director and Chief Executive Officer of the CUB, recalled the 120-year legacy of the bank founded in 1904, and its commitment to the freedom struggle and nation building.

During the event, a book titled Bank on the Banks of Cauvery was released. Tamil Nadu Governor R.N. Ravi, Minister for Social Welfare and Women Empowerment P. Geetha Jeevan, and G. Mahalingam, Non-Executive Chairman, CUB, were among those present.