A recent RBI report reveals that the bulk of Urban Cooperative Banks (UCBs) in India fall under ‘B’ and ‘C’ rating categories, jointly managing over 83% of total deposits and advances in the sector as of March 31, 2024.
Out of 1,472 UCBs, 496 banks (35.08%) were rated ‘B’, handling Rs 2,741.53 crore in deposits (51.66%) and Rs1,754.17 crore in advances (52.86%). Meanwhile, 619 UCBs (43.78%) were rated ‘C’, managing Rs 1,705.75 crore in deposits and Rs 1,031.71 crore in advances, accounting for over 31% share in each category.
Higher-rated banks remain a minority: only 32 UCBs (2.26%) achieved an ‘A’ rating, while 64 were rated ‘B+’. The lowest-rated ‘D’ and ‘E’ categories together comprise 261 banks, accounting for 15% of total deposits and advances.
While a large chunk of UCBs are rated in the mid to lower categories, a significant 90% of them have maintained a strong Capital to Risk-weighted Assets Ratio (CRAR) of 12% or higher, underlining their overall capital strength.
Despite this, capital adequacy remains robust. A total of 1,328 UCBs reported CRAR of 12% or above, including 45 of the 49 Scheduled UCBs. Only 29 banks fell below the 3% CRAR mark, showing the sector’s overall resilience amid challenges.
