We study the impact of the world's largest publicly funded health insurance plan for the poor on credit markets. India launched a health insurance plan that covered 500 million beneficiaries. The fact that opposition-ruled states did not implement the program due to political reasons allows us to compare border districts of implemented and non-implemented states within a difference-in-differences framework. We find that the loan delinquency reduces by 35% in implemented districts. Increased liquidity for loan repayment seems to be the short-term mechanism at play. We rule out the federal-level ruling party's influence as an explanation.