THE REVIVAL MINISTRY

The newly minted cooperatives portfolio can help the BJP redraw political and economic equations

- NAVIN J. ANTONY, NACHIKET KELKAR AND NANDINI OZA

Amit Shah never lets a good crisis go to waste.

In 2000, a financial crisis in the Ahmedabad District Cooperative Bank helped him get elected as chairman of the board of directors and wrest control of the bank from the Congress. The bank had for years failed to pay dividend; it had just posted a net loss of around ₹ 20 crore, and was struggling to keep customer confidence.

Shah’s task was cut out. To prevent the bank from going under, he had to shore up its capital reserves and ensure money flow. A time-honoured practice in such situations was to ask for more aid from NABARD (the National Bank for Agriculture and Rural Development, which finances cooperative banks) and more lenient terms from the usually hawkish Reserve Bank of India. But since the RBI had sensed that Gujarat’s famed cooperative sector was itself under considerable stress, Shah did not have much leeway.

So he led the bank into the lucrative domain of securities trading, financing brokers and accountants who mostly traded in small-cap equities. Those were good times for the stock market: indices were climbing record highs mainly on the back of fledgling, internet-based tech startups. The term ‘dot-com bubble’ was yet to enter the lexicon.

Shah’s bank leveraged the profits accrued from the boom to turn itself around. By the end of the year, it had made a net profit of around ₹6 crore and paid a 10 per cent dividend. Shah went on to quietly increase the BJP’s grip on the state’s deep-rooted cooperative structure, which included sectors as varied as diary, agriculture, textiles, labour and infrastructure.