Urban co-op banks grew 1.9 times in 5 years; personal loans at 17% CAGR: Report

Outstanding credit balances for Urban Co-operative Banks (UCBs) have grown 1.9x over the last five years, though at a slower rate than the overall industry. In September 2020, the total outstanding balance stood at ₹1.80 lakh crore, which is 2.2% of industry outstanding balances.

This spiked to ₹3.40 lakh crore, which is 1.80% of industry outstanding balances.

Among all key products at urban cooperative banks, the highest CAGR (49%) was reported for gold loans, followed by auto loans (38%). Other products, such as loans against bank deposits, grew 20%, and personal loans grew 17%.

Personal loans

Most personal loan enquiries with urban co-op banks came from prime and urban prime borrowers.

As of September 2025, prime and above-prime borrowers accounted for 54% of UCB personal loan enquiries, up from 50% in September 2020. The subprime share remained stable at 14%, indicating disciplined risk intake despite rising demand. NBFCs have recorded sharper growth in personal loan enquiries, largely driven by fully digital and frictionless customer journeys.

During the three months ended August 2025, 68% of NBFCs' loan enquiries converted into originations within five days, compared with 42% at UCBs backed by an end-to-end digital journey and faster approvals. 

However, around 39% of personal loan enquiries at UCBs ultimately resulted in disbursements within 30 days, significantly higher than the 22% conversion rate observed at NBFCs over the same period.

Young consumers under 35 comprise 51% of NBFC new personal loan customers versus 20% for UCBs, signalling strong growth prospects for UCBs in targeting this segment, shows Sahakaar Trends Digital Report, February 2026.

UCB personal loan delinquencies (90+ DPD) declined from about 4.5% in September 2020 to approximately 2.1% by September 2025, while NBFC delinquencies stood at 1.7% in September 2025 from 1.1% in September 2020.

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