Small borrowers’ honest: smaller the loan, better is the asset quality, says Union Coop Minister Shah

Union Cooperation Minister Amit Shah
| Photo Credit:
PTI

According to Union Cooperation Minister Amit Shah, smaller loans lead to better asset quality for banks because small borrowers tend to be honest.

Shah recalled his own experience, noting that when he proposed a ₹2.5 lakh collateral‑free loan at the Ahmedabad District Co‑operative Bank, the bank’s CEO—a seasoned banker—expressed doubt about the initiative.

The CEO claimed that Shah, as chairman, endorsed the scheme to advance his political interests, warning it would turn into a ‘loan mela’.

Prior to the event, Shah verified with the bank whether the scheme—now expanded to ₹5 lakh loans—was still active. He was informed that the default rate stands at just 0.22%, meaning 99.78% of the loans have been repaid with interest. He shared these remarks at a BSE gathering where the Security Operations Centre and a countrywide Core Banking Service (Bank in a Box) for urban cooperative banks were unveiled.

Shah stressed that cooperatives, banks included, are pivotal for fostering self‑employment across the economy.

He emphasized that people’s cooperatives should be built by pooling members’ savings into a substantial fund capable of supporting large‑scale enterprises. He pointed to Amul as an illustration: with 3.6 million women members each contributing less than ₹100, the organization achieves a turnover of ₹1.25 lakh crore, demonstrating the power of cooperative models.

Shah further urged the nation’s 1,400 urban cooperative banks to join the National Urban Cooperative Finance and Development Corporation (NUCFDC), which serves as their umbrella body.

At present, 690 UCBs are members of the corporation, which commenced operations in March 2024. NUCFDC’s mission is to supply these banks with shared technology platforms, core banking services, cyber‑security measures, capacity‑building initiatives, and operational assistance.

Shah declared that within a year, all urban cooperative banks should be brought under the umbrella organization, and he urged the office bearers of state UCB federations to assume responsibility for achieving this goal. He made these comments during the ‘Sahakar Nav‑Kranti’ program, following the inauguration of NUCFDC’s office.

Published on August 8, 2026