While addressing a workshop on Capacity Building of Telangana UCBs on recently, Prabhuti Samal, Deputy General Manager, Department of Supervision, RBI Hyderabad stated that as of March 31, 2023, urban cooperative banks in India have lent Rs 2.20 lakh crore, with Rs 1.30 lakh crore extended to the MSME sector.
He highlighted that traditional loan products like mortgage and gold loans offer limited growth and emphasized the need for UCBs to diversify their lending.
“Today, approving a Rs 10 lakh loan with Rs 20 lakh in collateral is not feasible. For CGTMSE coverage, banks must offer collateral-free loans up to Rs 10 lakh. UCBs need to update their loan policies to reflect these changes, and the current Capacity Building program is an excellent facilitator for this,” he said.
Samal also mentioned Telangana’s MSME policy, aimed at expanding the state’s MSME units to 25,000, and the proposed MSME Park between the ORR and RRR, which will provide UCBs with greater lending opportunities in the MSME sector.
Telangana Urban Cooperative Banks Federation Working President Madana Gopala Swamy raised concerns about the exclusion of UCBs from SLBC meetings. As of September 30, 2024, Telangana’s UCBs have lent Rs 6,289 crore, with Rs 4,000 crore extended to the MSME sector.
He highlighted the challenges UCBs face due to ineligibility for subsidies and other benefits, which limits their ability to lend to MSME borrowers, forcing many to turn to Scheduled Banks instead.
Swamy questioned why UCBs are excluded from key lending programs despite being tasked with achieving 75% lending in Priority Sectors by 2026. He urged the forum to analyse these issues and advocate for UCB eligibility in MUDRA, KVIC, and other MSME schemes.
It is reported that India has a total of 6.5 crore MSMEs. Among these, 3.9 crore are registered under UDYAM and 1.3 crore are GST registered.
