Referring to his experience as chairman of a cooperative bank in Gujarat, Union Home and Cooperation Minister Amit Shah said small loans have exceptionally strong repayment rates, as ordinary and lower-income borrowers are generally sincere in meeting their financial obligations.
Shah said his bank had introduced collateral-free loans of up to Rs 2.5 lakh, a scheme that continues today with the limit increased to Rs 5 lakh. He said almost the entire amount disbursed under the scheme has been recovered along with interest, with only a few exceptional cases of non-repayment, including those involving the death of borrowers.
He said the experience demonstrates that the smaller the loan, the better the recovery, highlighting the financial discipline of small borrowers.
Shah also emphasised the role of cooperatives in generating self-employment and building businesses by pooling small contributions. He said large enterprises do not necessarily require capital from a single individual; instead, cooperatives can bring together small contributors, create substantial capital and build large business institutions.
He described this collective mobilisation of small resources as the fundamental strength of the cooperative movement.
