The number of urban cooperative banks will shrink by 15 to 1,457 in FY25

The central bank said it initiated the consolidation process of UCBs in 2004-05, including the merger of non-viable UCBs with their viable counterparts, the closure of non-viable UCBs and the suspension of the issuance of new licenses. | Photo credit: FRANCIS MASCARENHAS

The central bank said it initiated the consolidation process of UCBs in 2004-05, including the merger of non-viable UCBs with their viable counterparts, the closure of non-viable UCBs and the suspension of the issuance of new licenses.

As a result, the number of UCBs decreased steadily from 1,926 at the end of March 2004 to 1,457 at the end of March 2025.

During FY25, seven mergers of UCBs took place – six in Maharashtra and one in Telangana – against six mergers in FY24, taking the total number of mergers since 2004-05 to 163, more than half of which occurred in Maharashtra.

In addition, eight unregistered UCBs – two each in Uttar Pradesh and Andhra Pradesh, and one each in Bihar, Maharashtra, Assam and Tamil Nadu – had their licenses canceled during the year. During FY24, 24 UCBs had their licenses canceled.

This brings the total number of licenses revoked since 2020-2021 to 57, mainly concentrated in the unplanned category.

Great growth

UCB deposit growth improved to 5.2 percent in 2024-25 from 4.1 percent a year ago. These banks’ credit growth also accelerated to 6.7 percent, the highest in six years, with improvement in both scheduled and non-scheduled UCBs.

At the end of September 2025, UCB deposit growth and credit growth were 6.8 percent and 6.4 percent, respectively

UCB’s asset quality, as measured by the gross non-performing assets (GNPA) ratio, improved for the fourth year in a row, with a GNPA ratio of 6.2 percent at the end of March 2025, down from the peak of 12.1 percent at the end of March 2021.

At the end of September 2025, UCB’s GNPA ratio stood at 7.6 percent, compared to 9.3 percent a year ago.

RBI noted that licensing of new UCBs has been suspended since 2004. The Reserve Bank recognizes the positive developments in the sector in the recent period and proposes to publish a Discussion Paper on the licensing of new UCBs.

Published on December 29, 2025