Cheers spread as fifteen UCBs from Gujarat comes out of SAF

In a significant development for the cooperative banking sector, the Reserve Bank of India (RBI) on Tuesday removed 15 Urban Cooperative Banks (UCBs) in Gujarat from its Supervisory Action Framework (SAF), providing a major boost to the growth prospects of UCBs in the state.

Speaking to Indian Cooperative, senior cooperator and NUCFDC President Jyotindra Mehta, who also serves as Chairman of the Gujarat Urban Cooperative Banks Federation, confirmed, “Yes, 15 UCBs from Gujarat have come out of SAF. The RBI lifted all restrictions on them on Tuesday.”

“Several of these banks had been under SAF for quite some time, and their performance has steadily improved. After detailed discussions with the RBI and proper due diligence, they were finally released from the restrictions,” Mehta added.

Indian Cooperative has accessed the list of 15 Gujarat-based UCBs that have been removed from SAF. However, in order to protect their interests, we are choosing not to disclose the full list. For instance, one of the banks namely Sardarganj Mercantile Cooperative Bank from Anand, which had been affected by the Madhavpura Mercentile Cooperative Bank (MMCB) scam, has come out of SAF after nearly 15 years.

This decision marks a turning point in Gujarat’s urban cooperative banking landscape. With these 15 banks exiting the SAF, very few urban cooperative banks in the state now remain under the RBI’s Supervisory Action Framework.

Gujarat is home to 211 urban cooperative banks (UCBs), which collectively hold deposits worth Rs 54,000 crore and advances of Rs 41,000 crore. The asset quality of these banks appears strong, with an aggregate gross NPA of 3.5% and net NPA of just 0.5%.

The removal of regulatory restrictions will further empower the concerned UCBs to operate with greater autonomy, expand their lending operations, and explore new growth opportunities that were previously constrained under RBI oversight.

The move is also expected to send a positive signal to cooperative banks across the country, encouraging other states to focus on strengthening the financial health of their SAF-listed banks through improved governance, risk management, and capital adequacy.