Urban Co-operative Banks (UCBs) are strengthening their position in India’s credit ecosystem, supported by steady balance growth, improving asset quality, and rising demand across retail and small-business segments, according to Sahakaar Trends, a joint publication by TransUnion CIBIL and National Urban Co‑operative Finance and Development Corporation (NUCFDC).
Outstanding credit balances of UCBs stood at ₹3.4 lakh crore as of September 2025, representing 1.9-times growth over five years, compared with ₹1.8 lakh crore in September 2020.
Despite accounting for around 1.8% of overall industry credit, the sector continues to expand while adapting to evolving borrower profiles, competitive pressures, and regulatory expectations.
The report notes that more than 1,400 Urban Co-operative Banks now serve over 90 million customers nationwide, with aggregate deposits of approximately ₹5.84 lakh crore, reflecting their continued importance in India’s financial inclusion ecosystem.
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“UCBs are expanding more widely into Bharat, extending formal credit beyond large urban centres to households and small businesses in semi-urban and emerging regions. Their proximity to local communities allows them to serve borrowers where local context and relationships matter, helping bring more of Bharat into the formal credit system.
As these banks expand their reach across retail and small-business lending, sustaining credit quality while broadening access will remain central to their role in supporting more balanced and inclusive economic participation,” said Bhavesh Jain, MD and CEO, TransUnion CIBIL.
“The expanding credit footprint of UCBs reflects strong borrower trust, particularly in semi-urban and emerging regions where access to formal credit remains critical. As these banks scale up, the focus must remain on strengthening institutional capacity, improving operational efficiency, and building resilient governance frameworks.
Supporting UCBs through this transition is essential to ensuring that their growth continues to translate into meaningful financial participation and long-term economic stability,” said Prabhat Chaturvedi, CEO, NUCFDC.
Sahakaar Trends: Portfolio Growth and Asset Quality Improvement
The Sahakaar Trends report highlights that UCB portfolios have entered a phase of measured and sustainable expansion, accompanied by structural improvements in asset quality.
Gross NPAs moderated to 7.6% by September 2025, compared with 9.3% a year earlier, reflecting improved credit appraisal practices, borrower performance stability, and stronger portfolio monitoring.
Digitisation, rule-based credit processes, and data-driven decision frameworks are increasingly being adopted across UCBs, improving compliance, operational efficiency, and portfolio risk visibility while maintaining relationship-led banking models.
Sahakaar Trends: UCB Lending Remains Concentrated in Eight Core Products
Sahakaar Trends Shows Commercial Loans Leading UCB Portfolios
Commercial loans, housing loans, retail business loans, loans against property, gold loans, personal loans, auto loans, and loans against bank deposits together accounted for 83% of total outstanding UCB balances as of September 2025.
Commercial loans remain the largest portfolio segment, accounting for 30% of outstanding balances, followed by housing loans at 14%.
Several product categories recorded strong growth over the past five years:
- Gold loans: 49% CAGR
- Auto loans: 38% CAGR
- Retail business loans: 19% CAGR
- Housing loans: 19% CAGR
- Property loans: 17% CAGR
- Personal loans: 17% CAGR
Manufacturing accounts for 46% of commercial loan value, underscoring UCB support for urban industry and MSMEs.
Sahakaar Trends: Ticket Size Comparison Across Lending Segments
The report shows distinct ticket-size patterns across products:
- Housing loans: ₹23 lakh (UCBs) vs ₹26 lakh (HFCs)
- Gold loans: ₹1.3 lakh (UCBs) vs ₹2.3 lakh (PSU banks)
- Commercial loans: ₹50 lakh (UCBs) vs ₹37 lakh (PSU banks)
- Personal loans: ₹4.7 lakh (UCBs) vs ₹2 lakh (NBFCs)
These trends indicate UCBs’ continued focus on collateral-backed retail lending and financing small enterprises, alongside increasing participation in mid-sized commercial credit.
Sahakaar Trends: Digitisation and Execution as Future Growth Drivers
The Sahakaar Trends report identifies digitisation, faster credit origination, improved conversion efficiency, and data-driven underwriting as critical levers for the next phase of UCB growth.
Institutions that combine community-based banking strengths with analytics-driven credit decisioning are expected to scale more sustainably while expanding financial inclusion across urban and semi-urban India.
