Urban Cooperative Banks (UCBs) across all four regulatory tiers strengthened their financial health during FY26, with improvements in profitability, asset quality and capital adequacy, according to the Reserve Bank of India’s Financial Stability Report (FSR) – June 2026.
The RBI’s tier-wise profitability chart showed Tier-1 UCBs remained the most profitable, recording the highest Return on Equity (RoE), Return on Assets (RoA) and Net Interest Margin (NIM) among all four tiers. Profitability across the remaining tiers remained broadly stable during the year.
On asset quality, the report showed improvement across all tiers, with Gross Non-Performing Assets (GNPA) and Net NPAs (NNPA) declining, while the Provisioning Coverage Ratio (PCR) increased between March 2025 and March 2026, reflecting stronger provisioning against stressed assets.
The tier-wise CRAR chart showed all categories remained comfortably above the regulatory minimum. Tier-1 UCBs reported the highest Capital to Risk-weighted Assets Ratio (CRAR) at 20.0% in March 2026 against the minimum requirement of 9%. Tier-2 and Tier-3 UCBs recorded 18.2% and 18.0%, respectively, while Tier-4 UCBs maintained 15.9%, above the prescribed 12%.
The RBI said the improvement across profitability, asset quality and capital adequacy reflects stronger balance sheets and reinforces the resilience of the UCB sector.
