UCBs are by and large financially sound. Out of 1540 UCBs, 1199 banks are CAMELS rated A and B, as per RBI, which are the ratings for satisfactorily run banks.
The gross non-performing assets (NPAs) of the UCB sector are 7.1 per cent as against gross NPAs of 9.1 per cent of the scheduled commercial banks(SCBs). Also, net NPAs of UCBs are at 2.6 per cent, while those of SCBs are at 3.7 per cent.
UCBs also have a better provision cover for NPAs. The provisioning coverage ratio (PCR) of UCBs is 66 per cent, while that of SCBs is 61 per cent. UCBs therefore, are well qualified to be included in all the schemes of the government.
Benefits of the new Rs 3 trillion credit guarantee scheme are also not available to UCBs and to the thousands of micro and small enterprises, who are existing customers of the UCBs.
In order to broad-base its support to micro and small enterprises, UCBs should be permitted to apply for being Member Lending Institutions of CGTMSE without any stipulation of size of their liabilities.
The existing micro and small enterprises borrowers of UCBs should be made eligible for emergency support extended to the enterprises under schemes that the government has announced to mitigate the economic hardships on account of the Covid-19 pandemic.