The Urban Co-operative Banks (UCBs) in India have shown signs of steady growth in the financial year 2023–24, with their combined balance sheet expanding by 4.04%, according to the latest data released by the Reserve Bank of India.
The total assets and liabilities of UCBs stood at Rs 7,07,669 crore as of March 31, 2024, compared to Rs 6,80,197 crore in the previous fiscal year. This growth highlights the sector’s continued relevance in grassroots banking and financial inclusion.
One of the key contributors to this growth has been the sharp rise in reserves and surplus, which grew by 13.45% year-on-year. This significant increase—from Rs 48,245 crore to Rs 54,732 crore—indicates improved profitability and a greater focus on internal capital generation among UCBs.
Deposits, the cornerstone of UCB funding, also saw healthy growth of 4.12%, reaching Rs 5,55,469 crore. This stability in deposit mobilisation reflects the trust that urban and semi-urban populations continue to place in cooperative banks.
On the other hand, borrowings declined notably by 13.80%, signaling a reduced reliance on external funds. Capital saw a modest increase of 2.78%, pointing to stable equity contributions by members. Overall, the liabilities side shows that UCBs are becoming more self-sufficient and focused on building financial resilience through retained earnings and deposit-based funding.
On the assets front, loans and advances—the key income-generating asset—rose by 4.07%, indicating a positive momentum in credit deployment. Total loans and advances increased from Rs 3,30,491 crore in FY 23 to Rs 3,46,903 crore in FY24.
This growth reflects increasing demand for credit, especially in micro, small, and medium enterprises (MSMEs) and other informal sectors. In tandem, cash in hand and balances with the Reserve Bank of India (RBI) rose by 5.25% and 11.99% respectively, highlighting UCBs’ focus on maintaining strong liquidity buffers.
Investments also recorded a mild increase of 1.65%, reaching Rs 1,93,814 crore, as banks continued to park funds in safe instruments such as government securities. The share of balances with banks and money at call and short notice declined slightly, suggesting a strategic reallocation toward more productive assets like advances and long-term investments.
A comparison between Scheduled and Non-Scheduled UCBs shows that while Scheduled UCBs (49 in number) manage a significant portion of the sector’s assets at Rs 3,21,723 crore, Non-Scheduled UCBs (1,423 banks) also recorded similar growth trends, collectively holding Rs 3,85,946 crore in assets. Scheduled UCBs demonstrated stronger gains in reserves, loans, and liquidity positions, whereas Non-Scheduled UCBs remained largely reliant on deposits.
In summary, the FY24 performance data showcases a maturing UCB sector that is gradually shifting towards a more robust and self-reliant financial model. With improved reserves, steady credit growth, and effective liquidity management, UCBs are well-positioned to support India’s financial inclusion agenda, particularly in urban and semi-urban areas.
The evolving financial landscape presents both challenges and opportunities for these cooperative institutions, as they balance traditional service models with emerging digital banking expectations.