Scheduled commercial banks (SCBs) have reported massive improvement in the asset quality and are well capitalised to support investments, job creation and growth even amid the current global downturn and uncertainties, finance minister Nirmala Sitharaman said on Tuesday.
NPAs at multi-decade low
“Gross non-performing assets (NPAs) of the scheduled commercial banks have come down to multi-decadal low levels. It was at 2.3% as of March 2025 while the net NPAs stood at 0.5%. I would think it is phenomenal for banks to achieve this at a time which is so challenging,” Sitharaman said at an event to mark the 120th foundation day of City Union Bank (CUB).
President Droupadi Murmu, who was the chief guest, said banks can play an important role in transforming MSMEs into the engines of growth. Payments banks, digital wallets, and banking correspondents have taken financial services to the doorsteps of people residing in remote villages, she said.
N Kamakodi, MD & CEO, City Union Bank, said with strong swadeshi roots, the bank grew from strength to strength and has completed 120 years of service to the nation with an impressive track record of profitability and dividend declaration.
Credit flow and economic growth
Sitharaman said results of macro stress tests showed that SCBs’ aggregate capital levels will continue to remain above the regulatory threshold, even under adverse stress scenarios.
The finance minister said strong, well-capitalised banks with near-record-low NPAs mean “cheaper, steadier credit for households, MSMEs and infrastructure.” It also means lower systemic risk and sustained confidence in India’s financial system, supporting investment, job creation and growth.
Sitharaman described private sector banks as “indispensable” to nation-building and urged them to expand credit, support infrastructure development, and provide timely, need-based funding for SMEs.
Praising City Union Bank, she said MSMEs account for 41% of its total advances, followed by agriculture (17%) and retail and wholesale trade (3%). The bank, she said, is living up to the principle that finance must support grassroots growth by lending to small businesses and farmers.