UCBs strengthening profile on regulatory support, improved margins

Urban co-operative banks have improved their credit profile and financial health backed by the regulatory support, slew of reforms especially in governance and economic upturn in the post pandemic phase.

With the repricing of loans and higher lending rates for fresh loans, the net interest margins improved from a low of 1.89 per cent in Fy20.

The better earnings have also helped urban banks to set aside higher amounts for bad loans. Thus the provision coverage ratio improved substantially from close to 59 per cent in Fy20 to 75.73 per cent in Fy23. This PCR level is approaching the level maintained by commercial banks at above 77 per cent.