Number of UCBs declines to 1,457 in FY25 as RBI consolidation continues

India's urban co-operative banks fell to 1,457 at end-March 2025 from 1,926 in 2004, as RBI consolidation continued via mergers, closures and licence cancellations

The number of Urban Co-operative Banks (UCBs) has steadily declined to 1,457 at the end of March 2025 from 1,926 during the same period in 2004 owing to the consolidation process initiated by the Reserve Bank of India (RBI) in 2004-05. The process included the amalgamation of unviable UCBs with viable ones, closure of non-viable entities, and the suspension of issuance of new licences.

 

During 2024-25, seven mergers of UCBs, six in Maharashtra and one in Telangana, were affected. With this, the total number of mergers since 2004-05 rose to 163, of which more than half were in Maharashtra.

   

During 2024-25, seven mergers of UCBs -- six in Maharashtra and one in Telangana — were effected. With this, the total number of mergers since 2004-05 rose to 163, more than half of which were in Maharashtra.

 

In addition, the licences of eight non-scheduled UCBs were cancelled during the year. These included two each in Uttar Pradesh and Andhra Pradesh, and one each in Bihar, Maharashtra, Assam, and Tamil Nadu.

 

On December 1, 2022, the RBI adopted a four-tiered regulatory framework for UCBs, in line with the recommendations of the expert committee on UCBs headed by N S Vishwanathan.

 

“The regulation aimed to balance the spirit of mutuality and co-operation more prevalent in smaller banks with limited area of operation vis-à-vis the growth ambitions of large-sized UCBs through geographical spread and diverse business activities,” said the report.

 

At the end of March 2025, 57.5 per cent of the UCBs were classified as Tier-1. Tier-III and Tier-IV UCBs, together with less than 6 per cent share in the total number of UCBs, dominated the sector, accounting for more than half of deposits, advances and total assets.