Performance evaluation of Urban Co-Operative Banks (UCBs) in India

Over recent years, the financial health of the urban co-operative sector has shown a remarkable improvement. In 2011–12, the sector showed an increased return on assets and a further fall in the ratio of Non-Performing Assets (NPAs). As per the new CAMELS rating model, 61 per cent of the UCBs, accounting for about 78 per cent of the total banking business of the UCB sector, had ratings of ‘A’ and ‘B’, indicating the good financial health of this sector. The Co-operative movement in India was started a century ago with the enactment of Co-operative society Act in 1904. The Co-operative structure in India can broadly be divided into two segments. While the urban areas are served by Urban Co-operative Banks (UCBs), rural co-operatives operate in the rural parts of the country. The banking related activities of UCBs are governed by the Reserve Bank of India(RBI),whereas the registration and management related activities are governed by the Registrar of Co-operative Societies(RCS) in case of UCBs operation in single state and Central RCS in case of multi-state UCBs. Keeping the above facts the present paper evaluates the performance of UCBs with absolute financial figures.