Operative Banks Enter Growth Phase As Credit Hits Six-Year High

Urban Co-operative Banks in India have marked a significant turnaround in FY25, with credit growth reaching 6.7 percent, the highest in six years. According to the Reserve Bank of India’s latest Trend and Progress of Banking in India report, the sector has moved beyond recovery and is now entering a steady growth phase.  

The consolidated balance sheet of UCBs expanded by 4.4 percent in FY25, compared to 4.0 percent in FY24. Deposits grew by 5.2 percent, while non-performing assets (NPAs) declined to 6.2 percent, reflecting improved asset quality. Enhanced profitability and stronger capital positions have further boosted confidence in the sector.  

Key Highlights  

• Credit growth surged to 6.7 percent, strongest in six years  
• Deposits rose to ₹5.84 lakh crore, showing improved customer trust  
• Balance sheet expanded by 4.4 percent in FY25, faster than previous year  
• NPAs reduced to 6.2 percent, signaling healthier asset quality  
• Sector shifted from balance sheet repair to sustainable growth phase  
• Capital buffers strengthened, supporting long-term resilience  

The RBI report underscores that UCBs are now better positioned to support local economies and small businesses. With improved fundamentals, the sector is expected to play a stronger role in India’s financial inclusion and grassroots credit delivery.  

Sources: CNBC TV18, Indian PSU, BusinessWorld