Reacting to the sharp rise in MSME lending by Public Sector Banks through technology-driven credit assessment models, Satish Marathe, Founder Member of Sahakar Bharati and a senior leader from the Urban Cooperative Banking (UCB) sector, has described the development as a “wake-up call” for cooperative banks.
Marathe cautioned that UCBs must urgently upgrade their systems, processes, and procedures to remain competitive in the fast-evolving MSME lending landscape. He pointed out that PSBs are increasingly leveraging digital platforms and data-based appraisal mechanisms to ensure faster, transparent, and more efficient credit delivery to small businesses.
“If UCBs fail to modernize in time, they risk losing the MSME segment as well, just as they earlier lost the housing loan segment to Scheduled Commercial Banks,” he warned.
Emphasising that MSMEs have traditionally been a stronghold of cooperative banks, Marathe said sustaining this edge will require swift adoption of technology, stronger risk management, and customer-centric reforms.
According to the Finance Ministry, PSBs have sanctioned over Rs 52,300 crore in MSME loans to 3.96 lakh enterprises under the digital Credit Assessment Model between April and December 2025.
