Urban Co-operative Banks (UCBs) across the country recorded a steady expansion of their balance sheets during 2024-25, driven by higher credit growth supported by deposits and borrowings, while maintaining robust financial performance, the Reserve Bank of India (RBI) said in its Report on Trend and Progress of Banking in India 2024-25, released on Monday.
According to the RBI, total deposits of UCBs increased to Rs 5.84 lakh crore at end-March 2025 from Rs 5.55 lakh crore at end-March 2024, registering a year-on-year growth of 5.2 per cent. Total advances rose to Rs 3.70 lakh crore from Rs 3.47 lakh crore, reflecting a credit growth of 6.7 per cent during the year.
As credit growth outpaced deposit mobilisation, the credit-deposit (CD) ratio improved to 63.3 per cent at end-March 2025, compared with 62.4 per cent a year earlier, indicating improved credit deployment by UCBs.
The RBI noted that the financial performance of UCBs remained robust, supported by improved asset quality, higher profitability and strong capital buffers. These gains were aided by ongoing consolidation within the sector and regulatory measures implemented under the four-tier regulatory framework to strengthen resilience.
At the end-March 2025, there were 1,457 Urban Co-operative Banks operating in the country. The report highlighted a growing concentration of business among larger entities, reflecting sectoral consolidation. The largest 57 UCBs accounted for 53.9 per cent of total advances, while banks with assets above Rs 1,000 crore held 65.5 per cent of total UCB assets.
Investment patterns of UCBs continued to evolve. While statutory liquidity ratio (SLR) investments accounted for the bulk of total investments, the composition has gradually shifted towards state government securities, whose share increased to 36.8 per cent at end-March 2025, up from 15.2 per cent at end-March 2015.
Profitability improved further during the year. Net profits of UCBs grew by 14.2 per cent in 2024-25, following a strong 52 per cent growth in 2023-24, aided by reduced provisioning pressures due to better asset quality. While operating profits of non-scheduled UCBs rose by 8.4 per cent, operating profits of scheduled UCBs declined by 5.5 per cent, reflecting a faster rise in expenditure.
UCBs remained well capitalised, with the capital to risk-weighted assets ratio (CRAR) improving to 18.0 per cent at end-March 2025 from 17.4 percent a year earlier, driven primarily by an improvement in Tier-I capital. The CRAR remained stable at 18.0 per cent at end-September 2025, the RBI said.
Deposit and credit momentum remained firm in the current year as well. At end-September 2025, deposit growth stood at 6.8 percent and credit growth at 6.4 per cent, indicating sustained business expansion by Urban Co-operative Banks.