asa case study final

8/8/2019 ASA Case Study FINAL

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PROMISINGAPPROACHESIN MF/MED SERVICESFORVERY POORPEOPLE

CASE STUDYOF ACTIVISTSFORSOCIAL ALTERNATIVESIN INDIA

Prepared by:

Gaamaa Hishigsuren

MEDA

Acknowledgement: I would like to acknowledge the inputs provided by ASA staffmembers, especially SenthilNathan, Murali, Pravin and Vijay.


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TABLEOF CONTENTS

Executive Summary .............................................................................................................i1. Context ...........................................................................................................................1

1.2. Local context target area ....................................................................................... 22.1. International Organization .....................................................................................142.2. Local organization ................................................................................................. 143.2. Socioeconomic conditions .....................................................................................31

4. Poverty Targeting and Assessment ...............................................................................334.1. Poverty measurement practices ..............................................................................334.2. Available Poverty Data ..........................................................................................354.3. Poverty Targeting ...................................................................................................39

5. Products and Services ................................................................................................... 405.1. Financial Products ..................................................................................................405.2. Microenterprise Development Services .................................................................425.3. Non-financial Services ...........................................................................................455.4. Design and Product Development: .......................................................................505.5. Implementation Process ........................................................................................57

6. Results ...........................................................................................................................596.1. Method of measuring results ..................................................................................596.2. Impact .................................................................................................................... 616.3. Cost Effectiveness and Sustainability ...................................................................65


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Title of Project/Program:Organization Name(s): Activists for Social AlternativesLocation Country: IndiaAuthor(s): Gaamaa Hishigsuren

Month/Year: August 2007

SEEP Networks Poverty Outreach Working Groups MF/MED Approaches TargetingVery Poor People

Case Study No. X

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Executive Summary

The Activists for Social Alternatives (ASA) is a not-for-profit non-governmental organization(NGO) registered as a public charitable trust, working for the development of poor in the droughtprone, poverty ridden area of central Tamilnadu (TN). ASA started its operations in 1986 in

Marungapuri block with the objective of addressing the rights of the downtrodden and theexploited, most of whom belonging to the Dalit community. ASA formed Sanghas and/or societiesof such people and built sustainable institutions out of such groups through education,conscientization, skill based training and capacity building and lobbying and advocacy. Watershedwas the entry point activity during the initial years. During the developmental efforts ASA hasundertaken and implemented several relief activities including drought relief and flood reliefactivities. Through the 20 years of close association with the community at grassroots ASA hasacquired competence in building sustainable Community Based Institutions, owned and managedby the people for their benefit.

During the late eighties, ASA found that rights and issues based formation of groups might not

ensure sustainability of the groups. It was found that once the issue at hand is solved the grouptended to disintegrate. There was also the growing realization that economic empowerment couldbe the strongest base for social, cultural and political empowerment of the poor. The search for astrategic tool which would help in achieving the multiple objectives of ensuring sustainability ofthe groups, provide economic progress and a platform for political, social and culturalempowerment, so that the multifaceted poverty is addressed holistically, ended with the exposureof ASA to the microfinance. The early nineties found the Visionary behind the institution, Mr.Devaraj and his colleagues visiting Bangladesh studying the Grameen Model of MF and host ofother NGO/MFI projects for learning the principles of MF and designing an MF program to suitthe needs of ASA. These efforts culminated in the adoption of MF as entry point activity for ASAin 1992 and the birth of the NGO- the Grama Vidiyal (GV).

The microfinance program started in 1992 was registered as a separate entity, the Grama VidiyalTrust in 1997 due to the need for a separate organizational structure and systems to meet thedemands of the program. GV operates with the mission of improving the standard of living ofmembers and provides the structure for delivery of MF-plus services of ASA aimed at politicaland social empowerment. GV, after ten years of experience of managing an integrated MFprogram GV has developed competence to run an MF program.

The overall strategy of ASA-GV is based on these competences developed, integrating them foraddressing the multi-dimensional poverty. ASA promotes groups and creates peoples structure towhich GV provides microfinance services for economic progress. ASA provides a wide range ofmicrofinance-plus services through various programs to the members held together by the MFprogram for their social and political progress.

Today GV is one of the largest microfinance institutions in the India reaching out to aboutnumerous very poor families with an annual growth rate of over 100 percent.

Grama Vidiyal Women Micro-credit Program:

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The micro-credit program was implemented through the women federation of Grama Vidiyalwhich is a mile stone development of ASA in the efforts of economic empowerment of the poorwomen. Grama Vidiyal was started in the year 1995 through women federation which is anoffshoot of ASA to attain its vision. The Grama Vidiyal women are the users, managers andowners of this entire program. Moreover, the women themselves elect their leaders to identify and

solve problems pertaining to their socio-economic life and to discuss about the progress of theprogram. In this program, the target is the poorest of the poor women.

The method of identifying target clients is itself unique and interesting. At first, by using housingindex and PRA wealth ranking tools, the poverty level of target group clients is identified. Thereare three major groups who are eligible to become a member: the poorest, poor and less poor(based on scoring). While the poorest members are the core target of ASA, there is no product orservice exclusively for the poorest clients as they are not merely a sub-segment: they defineASAs microfinance and microfinance plus program design and delivery.

Once eligible members are identified, a five-member group is formed where the members should

not have blood relationship, should belong to same village, should have like mindedness withcommon cause, should have same age group and should follow the group norms. In the same wayfour such groups are formed and united to have one centre with 20 members where a commonleader for administering the centre activities. In a branch, there are 150 centers. Every week,centre meeting takes place where a common centre song and members pledge and staff pledge isfollowed.

Savings and loan amortizations are collected in the centre meeting and new loan applications arereviewed. Then the loan application is approved by group members and recommended by thecenter leader, field officer and finally approved by the branch manager and disbursed to themembers through the branch office. Usually the loans are disbursed twice in a week and after 15days of disbursement; the branch manager makes spot verification of loan utilization. The loansare disbursed to different purposes like agriculture, business, income generation activities, contestin panchayat election etc. The loan amount is divided in to 50 weekly installments and repaid bythe members. The members repay the loan due regularly and in case of default due to genuinereasons, then the loan is rescheduled and motivated to pay back fully.

The loans are disbursed through ASA-Grama Vidiyal to meet the multidimensional needs ofincome generation activities such as cottage industries, small scale trades and industries, basketmaking, hand made articles, milk business etc. Members are also provided loans to start Kiosks,computer internet information providing centre.

As of June 2007, ASA is serving 199, 345 members of whom all are women through 65 branches.Repayment rate is 99.56%. The total value of loans outstanding is USD16.42 millions. Thenumber of loans disbursed is 699, 726 with a total amount disbursed accounting to USD 78.37million.

Credit Plus development Programs:

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ASA Grama Vidiyal has adopted Micro Credit scheme as a tool for eradicating poverty andto the betterment of poor women. Further, to attain the vision, ASA has been rendering variousdevelopmental schemes for the welfare of the needy women. One among the development effortsis forming of women federation of Grama Vidiyal. The federation of women has a three-tiersystem such as branch, district and state level. In the branch level, the center meeting is held once

in a week and 10 centers form a cluster. The cluster meeting is held once in 3 months and allmembers meeting is held once in a year. In the yearly all members meeting, the issues pertainingto women rights, political rights and also social problems and policy level changes are discussedand resolutions are also arrived.

Besides Micro Credit program, ASA also work for the cause of poverty alleviation throughWatershed development program, women empowerment program, dalit empowerment program,Matriculation School for the members children and Child labor eradication program, socialwelfare program, and Insurance scheme and also organizes training programs. Moreover, ASA hasadopted impact assessment tools such as ILS internal learning System, PLP Participatory learningprocess to see the impact of the program and to find out needs and make refinements in the

program.

By establishing a strong collaboration with international and national level donor agenciesand likeminded agencies, ASA has been making constant efforts to implement innovative modelsof others in its areas of operation. One among such efforts is the implementation of ICTinformation and communication technology program to help the rural poor women to access theinformation. Results of the ICT program include helping educated, unemployed youth findemployment and helping the poor access various government welfare programs.

International Womens Day:

Every year the celebration of international womans day program is organized in all thebranch areas through Grama Vidiyal federation. Through this program the unity and integrity arestrengthened and also awareness education is given on the problems relating to women, violenceagainst women, rights of women. Besides this, the members interact with each other and sharetheir different kind of experience they had in their areas. An exhibition of different products of ourmembers is also organized through which best entrepreneurs are encouraged and a strong marketlinkage is built to help each other.

Moreover, through best entrepreneurs, the members who need skill up gradation training isoffered and the government officials are also introduced to the members, out of which, they couldeasily tap government welfare programs in the future.Panchayat Raj System (Participation in Local Governance)

Grama Vidiyal members are imparted training on Panchayat Raj Institution and the rolesand responsibilities as per the legal purview and also motivated to participate in the localgovernance to achieve the goal of political empowerment. Moreover, the members are providedwith the loan to contest in the election and also all the other members are motivated to support ourmembers and vote for her. In this manner, the participation in the local self governance andcreating best administrators in the political scenario to attain sustainable development is enhanced.

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Above all, there is discrimination and lots of disparities among dalits and women incontesting in the panchayat raj election. Therefore a strong federation has been formed in the statelevel to bring a policy level change in the government. During the last election, 175 GramaVidiyal members contested and out of which, 103 members won.

MEDP (Micro Enterprises Development Program:

Through the MEDP (Micro Enterprises Development Program), ASA provides professionaltraining support to its beneficiaries for improving the quality of the product and to enhance theirentrepreneurial skills. The program also benefits the members to exhibit their products throughthe vidiyal model stalls in every branch by which the products become popular and the commonvidiyal members products exhibitions are also organized during special meetings and celebrationslike International womens day celebration, training programs and etc., Through this program astrong mentoring support and linkages linkage is created among our members by which themembers who are willing to learn any new business are paired with the best entrepreneurs of ASA.

Child Labor Elimination and Effective Rehabilitation Program:

This program was commenced in the year 1997 under the fund support of CHEERSwhich is a government project to eliminate child labor problem and to educate and rehabilitatechild laborers. Through this program, child labor children are given free education, stipend,vocational training, free health care facility and free issue of note books. Brilliant students are alsoidentified and given assistance to continue higher education.

Program Details (as of February 2006):Child labor schools - 5 No. of Child laborers benefited - 140Previous year Beneficiaries - 234No. of Students who are admitted in regular school - 203

Vidiyal Matriculation School:

Vidiyal Matriculation School is a boon to the Grama Vidiyal members which has made theirlongstanding dream come true. The members were longing to give good quality education to theirchildren through English medium and they were thinking that it is a high hanging fruit to the poor.So ASA realized their dream and started the school in the year 2001. The main aim of ASA is tobuild sustainable development by exterminating poverty. So that attainment of its aim is not veryfar off dream, because the process is already initiated and the future of the members children isbeing cherished with best environ. More than 75% of the people of India live in the villages. Thereal development of India lies in the development of villages. The school adopts the bestcurriculum with well qualified and experienced teaching staff. The school campus is wellequipped with all kinds of learning facilities suitable to have joyful learning to the children.Grama Vidiyal members are given awareness about the importance of education to their children.The school continues its services to the cause of sustainable development and building betterfuture for our members.

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Results

ILS Internal Learning System:

ILS Internal Learning System is a participatory impact assessment program of ASA to study theimpact of the program by using simple pictorial diaries. This program was implemented to learnthe real development of the members. Through the pictorial diaries, the women learn bythemselves and make a note about how they run their enterprises successfully by getting loansfrom Grama Vidiyal. are of two types. This project was launched in October 2002 and the diariesare designed to use for three years. It helps us and members to make a comparison between thedevelopment of this year and last year. Moreover, the members and organization are able tounderstand the overall program impact and needs of the members.

PLP-Participatory Learning Process:

This is a process that has taken on by ASA to monitor not only impact but also clients feedbackon the products and services. It is a participatory approach and assists the organization to learn thestrengths and gaps in the program, hence improve continuously. On a participatory method, theinformation is collected and a common data base is created and updated at the time of loandisbursement. Moreover, by conducting sample survey and focus group discussions with drop outmembers, exited members and present clients, the feed back is collected to know the wider impactof the program and to make refinements in the program to make it more beneficial and peoplefriendly.

Impact findings

Above all, the poor women have proved that they are credit worthy and there is concrete andsignificant growth in their life through this scheme and also their status in the family as well as inthe society has been enormously enhanced. There is no doubt that the women federation has beena force of instigating the welfare and upliftment of the poor. Moreover, the women federation ishelping the poor women by not only providing loans for the enterprises but also up gradation oftheir enterprises skills.

According a three-year panel study, the following results have been achieved1:

The ASA program appears to be reaching its target group given the highlevel of landlessness, few productive assets, low literacy, and poor living conditions fornewly joined members. Over time, ASA members are able to make significantimprovement in their productive activities. With the help of their loans ASA participantshave repaid debts, reclaimed mortgaged land, started new enterprises, reinvested in orimproved existing ones, or changed activities. Long-term ASA members in particular wereable to increase their ownership of land and livestock assets and improve their conditionsof work with respect to workspace, inputs and markets.

1 Noponen, ASA Impact Study Report, 2004.

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The women members of ASA are mostly active participants in the householdeconomy retaining sole or joint decision-making control of the use of the loan, theoperation of the business and the use of the profits. Gender relations were generally goodwith low levels of violence and abuse overall. There were improved gender-results forlong-term members in terms of greater female participation in household decision-making

and female sole or joint ownership of land and shelter assets. Long-term ASA members arealso more physically mobile visiting important government institutions and participatingby speaking out more in public meetings. The improvement in productive work activitiesand greater role played in home, workplace and community activities for long term ASAwomen members has gone in step with improved family well-being and living standardsfor their households. Long-term ASA members enjoy improved housing conditions andreport greater satisfaction with nutrition and health care access. There was a higher rate ofschool attendance and greater gender equity and corresponding lower rate of child labor forlong-term ASA members.

These positive results did not come at the expense of women and the burden of

her participation in the program. There were low levels of credit stress indicated byincidents of suffering deprivation or using exorbitant moneylender loans, or taking help ofgroup members to repay the ASA loan. Overall women were satisfied with the size of loan,the interest charged and the timeliness in receiving the loan. Participants gave highsatisfaction rating marks to their own involvement in the program, the functioning of theircenter group and the treatment and services rendered by field officers. Long-term ASAmembers were even more satisfied on these issues than newer members.

Below are three tables that present ASAs results in terms of reaching the poorest target clients,making a difference and building a sustainable institution for its target clients.

Table 1: Reaching the Poorest.2

ASA GV

% clients living at or below US$1/day NA

% clients living below national poverty line 95%

% of entering clients defined as Very Poor(Housing Index score of less than 4) 3

58%

% of entering clients defined as Poor (HousingIndex score of 5-8)

37%

% of entering clients defined as Non-poor(Housing Index score of greater than 8)

5%

% of clients women 100%

Poverty focus: Design, Geography, Targeting,Screening, Motivation, Culture of organization D, G, T, M, C

Average loan size4 US$106

2 Three sources of info are used for Poverty Outreach data: (1) Member database; and (2) Annual report with Auditedfinancial statements (2005).3 Analysis of Housing Index results is done using member database Housing Index measured on every new memberat the time they enter the program.4 Exchange rate of US$1=Rp. 45 (as of March 2006).

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Table 2: Impact5

ASA GV

% all clients experience reduction in economicpoverty

63%

% very poor clients experience reduction ineconomic poverty

65.7%

% client experiencing increase in voluntarysavings

70%

Drop-out rate for very poor6 4.6%

Overall drop-out rate 6.6%

Table 3: Overall Performance7

Sl.No. Description Cumulative

1.0 HUMAN RESOURCE

1.1 Total Number of Staff 75

2

1.2 Micro Finance75

2

2.0 OUTREACH

2.1 Number of Districts1

7

2.2 Number of Branches7

2

2.3 Number of Villages

3,96

0

2.4 Number of Centers12,82

0

2.5 Number of Groups12,82

0

2.6 Number of Peer Groups40,93

9

2.7 Number of Members203,1

76

3.0 MEMBERS

3.1 Number of Borrowers 186,328

3.2 Number of Insured Persons27,06

4

5 Two sources are used for the impact data: (1) Hishigsuren (forthcoming) and (2) MIS.6 Very poor is defined as those members who had less than 4 points on the Housing Index at the time they entered theprogram. Information is retrieved from MIS as of March 2006.7 ASA MIS report, July 2007. More info on financial ratios is in Section 6.

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4.0 SECURITY DEPOSIT

4.1 Amount of Security Deposit117,977,9

83

5.0 PORTFOLIO

5.1 Number of Loan Disbursed

729,4

23

5.2 Amount of Loan Disbursed3,270,139,2

55

5.3 Amount of Loan Repaid2,597,342,7

14

5.4 Amount of Loan Outstanding672,796,5

41

6.0 PERFORMANCE

6.1 Rate of Repayment 99.54%

6.2 Portfolio At Risk (PAR) 0.62%

7.0PERCENTAGE OF WOMEN

MEMBERS100%

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Cost effectiveness and sustainability:

ASA has been striving to find innovative solutions to reduce cost while not compromising

on the quality and outreach of its services. Examples of such innovations for cost effectivenessinclude: streamlined branch offices, low cost field operations by minimizing the staff visits tocenters (while empowering center leaders to take more responsibilities and leadership) and usinginformation and communication technology to improve efficiency in data management. As a resultof such cost effective innovations, ASA has been able to cover its costs from internally generatedrevenue with operational self sufficiency of 100% and financial self sufficiency of 95% by 2005,as noted in ASAs rating report by M-GRIL.8 According to the rating report of 2007 by M-GRIL,ASA reached FSS of 103% as of March 2007.

Sustainability is not only seen in terms of cost recovery but also in terms of institutionalsustainability. ASA always believes in participatory development approaches and thereby adopts

the policy of 100% transparency and maintain accountability among its target clientele groups andstaff. The organization structure itself is streamlined with well defined roles and responsibilitieswith which the aims and objectives are set to reach the vision of the organization. ASA hasdesigned responsive welfare schemes to its staff members.

The staff members are given 8.33% of their salary from the management with which asame amount is also deducted from the monthly salary and the same is added to their savings andwhen the staff relieve from the organization, the total amount will be given to them as service benefit. Besides this, the traveling allowance, out station work allowance, over time workallowance are also provided to the staff members.

Conclusion (SWOT approach):

STRENGTHS

The strength of ASA is really in the commitment of leadership and management with a strongmotto to serve the poor communities especially the poorest of the poor women. The mission iscommunicated and is followed in every layer of the organization. Also, ASA encourages itsmembers to take active role in decision making and management of the organization by promotingfederation of women members, hiring women members as community field officers and branchmanagers. Also, ASA is constantly changing its products and services in response to the changingdemand of its target market. ASA is highly innovative and open to new ideas and experimentationwith new technology. In addition, the following are identified as the strengths in the rating reportthat was published by M-GRIL in 2005:9

- Well established presence in the area of operation- Focused microfinance operations- Good MIS and accounting system

8 M-GRIL. Rating report, 2005. www.asadev.com9 Ibid.

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- Stable and experienced staff- Good portfolio quality- Improved profitability and sustainability

WEAKNESSES

ASA is still very much a learning organization. Therefore, an analysis of weaknesses is importantfor further improvement of its programs and institutional sustainability. The most recent ratingreport by M-GRIL pointed out that ASA is not authorized to mobilize savings, yet it collects asecurity amount of 5%. If ASA does not refund this amount at the end of theloan term, ASA is exposed to the risk of penal action by the regulators. Themain weakness is really has to do with ASAs current legal status. For more thantwo years now, ASA has been contemplating transformation into an NBFC-Mutual Benefit Truststructure for its microfinance program. Although, the organization has received the required initialequity for the registration of the NBFC, lack of clarity with the structuring of the equity capitalamong the different stakeholders and the operational intricacies of transformation presents some

uncertainty regarding its future governance and operating structure.

Related to the institutional transformation is a fear of possible mission drift. However, ASA is awareof the challenges during the transformation that could lead to mission drift, such as focus onprofitability, quantity versus quality, and alike. The governance and senior management teamcontinues to adhere to ASAs social mission to serve the very poor women.

OPPORTUNITIES

Opportunities include: GVMFLs potential market is the 9 million unbanked households in Tamil Nadu, in

addition to the unbanked in neighboring states Of these 9 million households, GVMFL targets 15% saturation after taking into account

suitability and competitive forces GVMFL will saturate Tamil Nadu and expand to Kerala, Karnataka, and Puducherry

However, there are some competitions from large national MFIs (SKS, Spandana). Mostcompetition comes from Tier II MFIs in Tamil Nadu (e.g. SMILE, BWDA, Sarvodhaya, IASC)

THREATS

Unfavorable external environment: Although the Tamil Nadu Prohibition ofCharging Exorbitant Interest Rate Ordinance, 2003 has been stayed by the High Court,

the uncertainty on account of it is likely to continue in the absence of a proper regulatoryframework differentiating MFIs from moneylenders.

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1. Context

1.1. Country Socioeconomic and Poverty Data

Table 1.1. Country Statistics

1.1.1. National Currency INR

Amount Year

1.1.2. Population (millions)1,065,070,607

July2004

1.1.3. Population density per square kilometre324 July

2004

1.1.4. Percentage urban / rural population

Urban :27.78%Rural :72.22%

July2004

1.1.5. Inflation 6.5% March2007

1.1.5. Nominal Exchange Rate (current, X Currency per US$1)INR 40.46 May

2007

1.1.6. PPP Exchange rate

1.1.7. HDI value0.611 July

2004

1.1.8. HDI ranking126 July

2004

1.1.9. GDP/Capita (PPP US$)3,737 July

2004

1.1.10. Local currency equivalent of $1-a-day internationalpoverty line

INR 10/day July2004

1.1.11. Population below national poverty line (%) 1 26.10 2000

1.1.12. Population living below $1 a day (%) 26.10 2000

1.1.13. Population living below $2 a day (%) 79.4% 2006

1.1.15. Population growth rate 1.606% 2007

1.1.16. Life expectancy 68.59 years 2007

1.1.17. HIV prevalence (% ages 15-49) 0.9% 2001

1.1.18. Malaria cases (per 100,000 people)179.33 Nov

2000

1.1.19. Population undernourished 20.0% 2006

1.1.20. Children underweight 79.4% 2006

1.1.21. Adult literacyMale

Female70.2%48.3%

2006

1.1.22. Net primary enrolment ratioMale

Female90.0%87.0%

2006

1.1.23. Net secondary enrolment ratioMale

Female53.7%45.7%

2006

1.1.24. Physicians per 100,000 people 59.7 2004

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1.1.25. Health expenditures per capita $91 2004

1.1.26. Gender-related development index (GDI) rank 105 2000

1.1.27. Gender-related development index (GDI) value 0.553 20001 Explain how the national poverty line is defined:

The poverty line in India measures only the most basic calorie intake, recording notnutrition but only the satiation of hunger. At present the poverty line stands at Rs 368 ($9USD) and Rs 559 ($14 USD) per person per month for rural and urban areas, just aboutenough to buy 650 grams of food grains every day. A nutritious diet itself would costaround Rs 573 per capita per month, not to mention the other costs of securing otherbasic needs such as clothing, electricity, shelter and healthcare. This total should pushIndias poverty line to 840 Rs ($21 USD) per person per month, about $2.15 USD whenadjusted for PPP. When such an inclusive measure of poverty is used, as many as 68-84%of Indians would qualify as poor compared to the current official statistics of 26.1%.

Source: Mohan Guruswamy and Ronald Joseph Abraham, The Poverty Line is a

Starvation Line, http://www.infochangeindia.org/agenda6_04.jsp

1.2. Local context target area

1.2.1. Briefly describe local socioeconomic conditions

1.2.1.1. Geographic reference of location and size of population

According to World Bank, out of a total world population of 6 billion, a total of1.2 billion people, live on less than $1 per day (World Bank, 2004). The majority of themlive in Asia. Poverty is considered affecting over 40% of the population of South Asia.India alone is said to host about one third of the worlds poor. 70% of Indias over 1

billion inhabitants live in rural or semi urban areas. 26% or 260 million people live belowthe poverty line of $1 per day (World Bank, 2004). Poverty and rural developmentremains the number one issue in India.

Government estimates show that over 250 million people are left without properaccess to credit despite a network of 33 thousand rural and semi urban branches ofcommercial banks, 14 thousand branches of Regional Rural Banks (RRBs) and 92thousand outlets of cooperatives (Planet Finance, 2002). The poorest people very often donot comply with the norms that banks set for accessing credit. They neither have salarycertificates nor the required collateral to show as security against the loan. In India, thepoorest citizens access credit mostly through informal channels such as the village

moneylenders who lend at very high interest rates whereby the result is that the poortherefore remain perennially debt-ridden which ultimately results in them loosing theirdignity.

To date in India, over an estimated 8 million poor people (mostly rural women)benefit from microfinance services (Chakrabarti, 2004),10thereby leaving a vast unmet

10 This estimate is based on the outreach of NABARDs bank linkage program as of 2002. At the time ofthe dissertation research, there was no systematic estimation of the number of poor reached by

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demand for developing credit, savings and insurance activities which is termed asmicrofinance services targeted at what is until today referred to as the non-bankablesector. The perpetual dependence of the rural poor on various informal sources of credit,widespread unemployment, illiteracy and non-availability of technical support to suchhouseholds demonstrate the high level of demand for credit. Estimates of the demand for

credit in the rural areas, particularly among the unorganized workforce and the womenvary from at least US$ 3.3 billion on the basis of a minimum need of US$ 44.4 per familyto US$ 11.1 billion (Planet Finance, 2002). The latter estimate envisages thatapproximately 75 million households would need microfinance, of whom 60 millionfamilies will be in the rural areas while the remaining 15 million families would be in theurban areas. The annual credit usage by rural households is assumed to be Rs. 6,000 perhousehold, while for the urban poor households an average of Rs. 9,000 has beenestimated. In addition to the demand for credit, there is demand for other financialservices, such as insurance. The credit estimates indicated above also do not include therequirement of funds for housing.

A rough estimate of the supply of credit to the poor includes about Rs. 97 billiondisbursed by the banks during 1997-98 under various schemes including the governmentsponsored poverty alleviation programs (Planet Finance, 2002). Another Rs. 1,37 billioncovering around 100 million families had been disbursed up to September 1998 throughSHG linkage programs and other credit delivery channels of MFIs (Ministry of Finance,1999). These data indicate a vast unmet demand for microfinance, and ample scope forgrowth of different kinds of MFIs and MF service providers.

1.2.1.2. Local population characteristics:

ASA was founded and operates in Tamil Nadu. The state has 29 Districts with atotal population of 64 million. Of which 14 million are below the official poverty line.ASA-GV is currently operating in the following districts as depicted in the diagram.

microfinance services, primarily because there were many non-governmental organizations and smallprojects whose total microfinance clients were not reported.

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Estimated population of 65.7 Million (2006)

14 Million below poverty line

Total 16.4 Million Households

9 Million Rural Households

Close to 5.2 million rural households do not have a bank account

7 Million rural households do not have access to formal credit

Source: Census and Banking Statistics, RBI

The area has witnessed a vicious cycle of poverty due to persistent conditions ofdrought and decreasing soil productivity. Migration, bonded labor, contract labor, andchild labor are still common in the area. Most of the craftsmen are in perpetualindebtedness to their contractors. About 80% of the population is from the social andeconomically depressed classes that hold only 20% of the land. Child marriage, violence,

female infanticide and prostitution that exist in the area clearly demonstrate a hostileenvironment for women. Caste politics, communal violence and the rising atrocitiesagainst dalits (a scheduled caste, formerly known as "untouchables"), much of which isdirected towards women, in central Tamil Nadu has led to an overall erosion of humanvalues.

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India, Tamil Nadu State and Tiruchirapalli City Highlighted

Tamil Nadu Administrative Units and Population

No. of Districts - 29

No. of Thaluks - 167

No. of CD blocks - 385

No. of Panchayats -12996Population - 55,000,000

Below Poverty line - 20,000,000

Women in Tamilnadu

TN Government has consistently claimed the superiority of its schemes forwomens welfare, vis--vis other states. However, the ground reality is cause for a graveconcern. As per the 1991 Census, women in TN constitute 49.3% of the total population.Even though female literacy rate in TN has grown considerably from 1981-1991,shooting up from 35% in 1981 to 51% in 1991, the gender gap between male and femaleliteracy rates has continued: 51% versus 74% in 1991. Of all women, the dalitand ruralwomen are even more disadvantaged: 35% and 44%, respectively. Drop-out rates of girlshave been higher than those of boys. While the drop-out rate of girls at the primary stagehas decreased from 25% in 1984-85 to 16.5% in 1998-1999, these drop-out ratesaccelerate sharply at the higher levels of education.

Access to health care service is another concern. There are indications thatmedical services for women reach rural and urban areas disproportionately. While 95.2%of the mothers in urban areas receive institutional assistance for deliveries, only 47.8%receive such assistance in rural areas.

According to the NSS survey in 1993-1994, the workforce of women in TN(rural: 47.8% and urban: 22.8%) is higher than the national average (rural: 32.8% andurban: 15.4%). The work participation of women in TN has increased over the years.However, the types of works undertaken by women demonstrate the subservient positionof women at work in TN. The majority of the working women are employed in cashewnut processing, cotton spinning, match factory and alike.

The working Group on Womens Development in 9th Five Year Plan reported thatViolence against women should be viewed as one of the most crucial social mechanisms

by which they are forced into a subordinate position. It is a manifestation of unequalpower relations, which has led to mens domination over and discrimination againstwomen. Thus violence against women, throughout their life, comes to be sociallysanctified. Over the past decade, there has been a growing awareness of this disturbingphenomenon, and its long-term impact on the development and empowerment of women.The study conducted by Peoples Watch reveals that the crimes connected to women areinterlinked. For example, sexual harassment, eve teasing and molestation often end in

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either murder or suicide. Among the total 582 instances of violence against women, 191are related to dowry related violence.

Women and Governance

The Indian Constitution, through the instrument of adult franchise and Article 15which prohibits discrimination on grounds of sex, guarantees political equality to women.Such political equality is hardly exercised by the women of India, including in TamilNadu state. The 73rd Amendment of the Indian Constitution, by legislating a compulsory33% reservation for women in all local governing bodies, has brought about a significantchange. At the village Panchayats level, women form 33.7% of members and hold 33.8%of presidents positions. At the Panchayat Union level, they form 35.3% of members andhold 36.1% of chairpersons positions. At the District Panchayat level, they form 34.7%of members and hold 35.7% of chairpersons positions. But, in other levels of politicalpower and decision making the situation of women remain dismally low, both in thecountry and in TN. For instance, among the 27 male ministers in the State, there are just 2

women ministers (Tamilnadu People's Forum for Social Development, 2001).

Child labor

The incidence of child labor was found to be relatively high in the rural areas ofAndhra Pradesh, Kamataka, Tamilnadu and Punjab (Ministry of Finance, 1999).Estimates of child labor in Tamilnadu have been difficult to compile, given the highlyunorganized, informal and unregulated nature of the economy, and the labor market.

The 1991 Census categorized 578,000 children (age 5-14) as child workers. NSS(round 43) calculated that there were 1,100,000 child laborers in TN. Calculations basedon enrolment data of the Department of School Education show that nearly 2800,000children in the 5-14 age group were out of school in 1996-97. Experience at both policyand grassroots levels in states like Kerala has clearly shown that the only effective answerto the problem of child labor is to ensure that all children of school-going-age are inschools (Development, 2001).

Summary

While TN has benefited from improved social development in terms of literacy,health care, employment and human development index, great disparities still persistacross women vs. men, rural vs urban, dalitvs. non-dalitand poor vs. wealthy. Thus,it is important to look at social development by categories, as opposed to as a wholeat the state level, and direct the assistances to those groups most in need.Development programs need to be designed with specific focus and strategy for suchpriority sectors, such as women, dalits, rural poor and children.

1.2.1.2.1. Ethnic groups

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With a population of over a billion,India is a country of striking contrasts andenormous ethnic, linguistic, and cultural diversity. There are more than 1,600 languages,nearly 400 of which are spoken by more than 200,000 people. Many of the 25 states thatmake up India's federation are larger than most countries. Thirteen states have more than20 million people, six have populations of 60 million, three exceed 80 million, and one

has more than 160 million people. These states differ vastly in terms of their naturalresources, administrative capacity, and economic performance. In terms of language,caste, tribal origins, ethnic and cultural divisions, the people of India are a rich mosaic.There are hundreds of distinct ethnic groups, 18 major or official languages and morethan 1600 local dialects. The religious communities include Hindus, Muslims, Christians,Sikhs, Buddhists, Jains and Parsis.

1.2.1.2.2. Most important economic activities

Agriculture plays an important role in the economy, accounting for about 25.3percent of the country's gross domestic product (GDP) in 2000-2001 and 60 percent of

the total labour force. Industry and manufacturing have expanded over the past decade.These sectors now account for about 22.4 percent of GDP. Vocations and incomegenerating activities exist but the poor lack access to working capital for achieving asustainable scale and to come out of poverty.

1.2.1.2.3. Cultural and religious background

Dalits in Tamil Nadu

In spite of decades of reservations and the government claiming to have spentmillions of rupees fordalitwelfare, Tamilnadu (TN) has a poor record of empowerment

ofdalitcommunities. Most of the caste clashes involving dalits, in the recent past in TNare linked to visible disparities in terms of access to productive resources like land andcredit, to the disadvantage of the dalits.

Dalits, as per the 1991 census, form 19.18% of the total TN population, higherthan the national average of 16.48%. Significant majority of the dalits (nearly 80%) stilllive in rural villages (Tamilnadu People's Forum for Social Development, 2001). Landsowned by dalits form only 7% of private lands in TN. This property is mostlyunproductive and less fertile. Combining of the above two factors (80% ofdalits live inrural villages and majority of them do not own land) results in most of the dalitsbeinginvolved in agriculture and leading a precarious life as landless agricultural laborers.

Most agricultural laborers live below the poverty line due to very low and highly seasonalincome.

The right to education, like the right to own land, has been denied to dalitsby thetraditional caste system over the centuries. While overall in TN about 40% of theresidents remain illiterate, as high as 60% ofdalits are illiterate. The situation is evenmore tragic in the case ofdalitwomen, vis--vis non dalitwomen. Compared to a nearly50% literacy rate for non-dalitwomen in TN, not even 30% ofdalitwomen are literate.

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Great disparity between dalits and non-dalits is also found in terms of qualityhealth care. The higher mortality rate and death rate for the dalits in rural areas is due tolack of health, under-nutrition and lack of awareness of health care.

According to the 1991 Census, the Scheduled Castes (SC) and Scheduled Tribes(ST) comprised 16.3% and 8% of the total population in India, respectively. Out of thetotal SC and ST population, 62.8% and 36.3%, respectively, were landless agriculturallaborers. In Tamil Nadu state, 19.2% of the state population belonged to the SC category,according to the 1991 Census. They formed 22.9% of the rural population and 11.9% ofthe urban population. By the same report, the literacy rate was 46.7% among SCpopulation, in which womens literacy was 34.9%. Jacob & Bandhu (2002) claim that atleast 80% of the total dalitpopulation is concentrated in the rural areas and that the vastmajority of them are landless agricultural workers, which reveal the situation ofdalits asthe bottommost layer of society. More than 85% of the total SC population in Tamil Naduremains confined to agriculture, fisheries, leather tanning, scavenging and similar manual

and sometimes demeaning occupations.

1.2.1.3. Occurrence of droughts, floods, natural disasters or conflicts

Many areas are affected by drought and poverty.

1.2.3. Brief profile of microfinance environment.

1.2.3.1. List microfinance institutions (other than subject of case study) and otherfinancial institutions/services accessible by the poor.

The financial sector in India has gone through three broad phases. During the firstphase until the 1960s, pursuing developmental objectives through the financial sectorfocused primarily on delivering agricultural credit through cooperatives. During thesecond phase, the government also established the Integrated Rural Developmentprogram (IRDP) in 1980-81 to direct subsidized loans to poor self-employed peoplethrough the banking sector. Over almost two decades IRDP extended assistance to about55 million families. The second phase culminated in 1989 with the official loan waiverwhich undermined what was left of any credit discipline. The third phase was started bythe financial crisis of the early 1990s leading to the first significant economicliberalization measures, including reforms in the financial sector. These included the slowrestructuring of the commercial and regional rural banks, the freeing of some interestrates, the consolidation of the governments self-employment schemes, the introductionof Local Area Banks, the introduction of Mutually-aided Cooperative Societies (MACS)autonomous of government control and other such measures. This process ofrestructuring continues to date. A contradictory to this deregulation of interest rate was,however, the interest rate cap imposed by the Tamil Nadu State Government on lendingactivities other than commercial banks.

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As the 1990s progressed, a fast growing number of savings and credit groups(known in India as self-help groups or SHGs), predominantly with women members, alsoemerged, as did a range of specialized Microfinance organizations (MFIs). By the end ofthe century significant support structures for SHGs and MFIs had been put in place,including active promotion by the public National Bank for Agriculture and Rural

Development (NABARD) of bank lending to SHGs and a Foundation for micro-credit setup by the Small Industries Development bank of India (SIDBI). Again, an exception wasthe interest rate cap imposed by the Tamil Nadu State Government, which had significantimplications on the microfinance activities.

By April 2001, 285,000 SHGs had received loans from 41 commercial banks, 166regional rural banks (RBBs) and 111 cooperative banks, with an average loan per groupof Rs. 18,000. India had nearly 400 million people living below or just above an austerelydefined poverty line. Approximately 75 million households therefore need microfinance.Of these, nearly 60 million households were in rural areas and the remaining 15 millionwere urban slum-dwellers. The current annual credit usage by these households was

estimated in 1998 to be Rs. 465,000 million or US$10 billion (Fisher & Sriram, 2002).On the other hand, it is estimated that formal banks originated small loans to some 40million households in 2000. The remaining 35 million households were perhaps meetingtheir credit needs through the informal sector. Furthermore, while there is an increasingsupply of financial services and all bank groups met the overall targets under prioritysector lending, there were shortfalls under sub-targets set for agricultural advances.Advances to the agricultural sector by public and private sector banks amounted to 15.8percent of their net bank credit (Government of India, 2003). Micro-finance institutionshave arisen because of the gap between demand and the formal sectors limited supply.

Summary of the organizational profile of the financial sector

According to the Reserve Bank of India, MicroFinance institutions (mFIs) are thosewhich provide thrift, credit and other financial services and products of very smallamounts mainly to the poor in rural, semi-urban or urban areas for enabling them toraise their income levels and improve living standards". mFIs have emerged broadlyunder three categories :

i. Not-for-Profit mFIs Societies registered under Societies Registration Act, 1860 or similar State Acts Public Trusts registered under the Indian Trust Act, 1882 Non-profit Companies registered under Section 25 of the Companies Act, 1956ii. Mutual Benefit mFIs State credit co-operatives National credit co-operatives Mutually Aided Co-operative Societies (MACS)iii. For-Profit mFIs Non-Banking Financial Companies (NBFCs) registered under the Companies Act,

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1956 Banks which provide mF along with their other usual banking services could betermed as mF service providers.

Formal financial sector entities include:a. Branches of commercial banks and RRBs, which both take deposits and extend loans.

b. Cooperative banks at the village, town, and district levels, and urban cooperativebanks, which both take deposits and extend loans, although a significant part of theirlending funds come from NABARD.

c. The Post Office, which provides savings as well as insurance services, and theNational Small Savings Organization, which sells deposit instruments.

d. Non-banking finance companies (NBFCs), very few of which are allowed by theReserve bank, to take deposits. Within NBFCs, there is a special category calledresiduary non-banking companies, or RNBCs, which are allowed to raise anunlimited amount of deposits, as long as 80 per cent of it is put in government andbank deposits. Peerless, Sanchayani and Sahara are examples of such RNBCs.

e. The Life and General Insurance Corporations.

The range of emerging MFIs comprises:a. Not-for-Profit MFIs such as societies and trusts (legal forms of NGOs) that lend to

borrowers, usually organized into SHGs or into Grameen bank-style groups andcenters.

b. Mutual-benefit MFIs, especially cooperatives, some like the Self-Employed WomensAssociation (SEWA) Bank registered as urban cooperative banks, while new ones,especially in Andhra Pradesh, are increasingly emerging as MACS under the newcooperative acts.

c. For-profit MFIs incorporated as non-banking financial companies such as BASIX andSHARE Microfinance Limited.

Despite having a wide network of rural bank branches in the country andimplementation of many credit linked poverty alleviation programs, a large number ofthe very poor continue to remain outside the fold of the formal banking system.Various studies suggested that the existing policies, systems and procedures and thesavings and loan products often did not meet the needs of the hardcore and assetlesspoor. Experiences of many anti-poverty and other welfare programs of the state aswell as of international organizations have also shown that the key to success lies inthe evolution and participation of community based organizations at the grassrootslevel. A series of research studies and some action research projects carried out byNational Bank for Agriculture and Rural Development (NABARD) led to theevolution of "Self-Help Groups (SHG) - Bank Linkage" model as a cost effectivemechanism for providing financial services to the unreached and underserved poor.Besides SHG-bank linkage program, a number of NGOs had started experimentingwith various initiatives like replication of Grameen, networking with NGOs andfinancing through SHGs" federations and co-operatives to take financial services tothe poor clientele. Since different structures and organizations are operating underdiverse legal framework and have been adopting varied approaches, it is increasingly

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being felt that a suitable national policy framework is essential for an orderlydevelopment of the mF sector.

Self-help Groups (SHGs) in Tamil Nadu

Self-Help Groups (SHGs) have been promoted by the state government in recentyears. Originally initiated in May 1989, in 75 blocks of 8 districts of TN, with assistancefrom the International Fund for Agricultural Development (IFAD), the program as of2001 covered all the 368 blocks in the 28 districts of TN. According to Tamil NaduCorporation for Development of Women (TCDW) data of September 2000, the totalnumber of SHGs in TN functioning in three phases was 45, 719. The total number ofwomen involved was 806,369 with the total amount of loans originated equaling to Rs.1,033,541. The repayment rate was 96%. A field sample study done for IFAD in 24 SHGsof varied grades in 8 villages in the 3 districts of Dharmapuri, Ramanathapuram andMadurai, though limited in its range of analysis, reports the following trends:a. Approximately 68% of the members of the 24 SHGs were below the poverty line at

the time of group formationsb. 43% belonged to the very poor householdsc. 21.5% of the members belonged to women-headed householdsd. 21% of the members belonged to dalit households.The study also reported some weaknesses in the SHG model.a. There is no focus on particular categories of women headed householdsb. Targeting, particularly to the backward households, may require greater attentionc. Since most of the Government schemes are implemented through the SHGs, villages

and households that do not belong to SHGs are deprived of the benefits.d. SHGs need to directly address gender specific causes of poverty; otherwise the gains

to women maybe contingent upon male support and short-lived.

1.2.3.3. Demand versus supply of microfinance services.

While analyzing the demand and supply position of mF, it was observed that variousestimates put the requirements of microcredit at Rs.150 billion to Rs.500 billion per yearand an additional Rs.10 billion is estimated for housing per year. As against theseestimates, bank advances to weaker section aggregated Rs.90.7 billion during 1997-98,while MFIs and SHGs are estimated to have provided about Rs.1.37 billion (cumulativeup to September 1998), suggesting a vast unmet gap in the provisions of financialservices to the poor. Incidentally, about 36 per cent of the rural households are found tobe outside the fold of institutional credit.11

1.2.3.4. Depth of microfinance outreach.How poor are the majority of microfinance customers? To what extent are very poorpeople reached?

11Debt and Investment Survey, Government of India, 1992

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There is no reliable data on this. ASA has assessed the poverty level of its clientsmostly using their own internal mechanism, such as Housing Index, proxies inmember application form and internal learning system. Also, ASA participated in thetesting of two industry level tools (USAID/IRIS PAT and CGAP/GFUSA PPI).However, the results of these tests are not accepted as reliable data for reporting.

1.2.4. Poverty1.2.4.1. Existing Poverty data and geographic areas of the country where extremepoverty is most concentrated.

Poverty has been endemic and persistent in Tamil Nadu. The percentage of peoplebelow poverty line declined from mid-1950s to early/mid 1960s, but went up later. Fromthe early 1960s to 1980s, about 50% of Tamil Nadu population was continuously belowthe poverty line (Tamilnadu People's Forum for Social Development, 2001). In 1993-1994, Union Planning Commission estimates, the poverty rate has come down to 35%.

Despite this positive progress, rural and urban disparities persist. While in 1973-1974, rural poverty (57%) was higher than urban poverty, in 1993-1994, urban poverty(39.8%) exceeded rural poverty (32.5%). The situation of the urban poor in slums hassteadily deteriorated, leading to serious deprivations and dire lack of basic services inslums. Almost 25% of urban people in Tamil Nadu live in slums that grow at about 4.5%per annum (Tamilnadu People's Forum for Social Development, 2001).

According to the Ninth Five Year Plan of Tamil Nadu (1997-2002), Tamil Nadu isan educationally advanced state with a general literacy rate of 62.66% compared to thenational average of 52.21%. It ranks third among major states with regard to generalliteracy and in female literacy rate. However, according to the NSS Organization surveyconducted in 1998, there is disparity due to gender: 80% of the males are literate whereasonly 60% of the females are literate. There is also disparity due to social status of thepopulation. The literacy rate for the dalit, especially female dalits is lower than the stateaverage: 39.5% fordalits and 29.5% fordalitwomen, while the state average is 63%.

1.2.4.2. Does the target area fall within these extreme poor regions?

Although poverty is persistent and prevalent in the state of Tamil Nadu, it is not theextreme poor state.

ASA is planning to expand its services to serve the unmet demand of the poorest in theneighboring states.

1.2.4.3. If known, what is the proportion of population in the target area living below$1-a-day and/or within bottom 50% of people living below the national poverty line?

No reliable data

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1.2.4.4. Main determinants of poverty.

Based on ASAs experience, the main indicators of poverty include: caste, gender,education level, amount of land and animals owned, location and economic sector ofincome generating activities. The first two are main causes of poverty.

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2. Organizational Framework

2.1. International Organization

Not applicable

2.2. Local organization

2.2.1. Organizational development (S)

Table 2.2. Institutional Background

Issues Observations

2.2.1.1. Name of the organization orinstitution

The Activists for Social Alternatives (ASA)Grama Vidiyal

2.2.1.2. Geographic area of operation Tamil Nadu, Southern part of India

2.2.1.3. Legal structure Public charitable trust

2.2.1.4. Registration status

ASA - 31/1986 9th April, 1986 under publiccharitable trust act

GV NBFC

2.2.1.5. Regulation status

In India, NBFCs non banking financialcompanies registered under companies act1956, 45 IA RBI registration is considered to beregulated.Trusts are monitored by income tax departmentof finance ministry of Govt of india, registrar oftrusts and socities, Home Ministry of Govt ofindia, etc.

2.2.1.6. Date establishedASA - 1986GV 1995

2.2.1.7. Specialized (MF/MED) ormultisectoral

ASA Rights based Issue based developmentprograms

GV Microfinance

2.2.1.8. Start of MF/MED activities 1993

2.2.1.9. Core business (f.i. credit,

savings, )

1. Credit2. Savings3. Insurance

4. Business loans (Individual loans)5. Loans for poorest segment (specialloan/multipurpose loan)

2.2.1.10. Business model Grameen type microfinance

2.2.1.11. Target market MF/MEDpoorest of the poor community in tamil nadu atpresent. ASA-GV may expand to other states infuture.

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Issues Observations

2.2.1.12. Number of clients/participants MF/MED

Total members 203176Total borrowers - 186328

2.2.1.13. Number of staff 752

2.2.2. Organizational development (S)

2.2.2.1. Mission and vision

ASA-GVs vision is A value based, poverty free, productive, prosperous, humane andsustainable Grama Vidiyal Family. The internal vision is to become an organizationowned by members and managed by professionals in the medium term and to be anorganization owned, managed and used by women in the long term.

The mission is To empower women of the poorest families socially, economically andpolitically through networking them into community institutions and through efficientpoverty alleviation and microfinance program.

The overall approach of ASA-GV can be summarised as from women to families andfrom families to society identifying women as the poorest and worst hit by poverty.

2.2.2.2. Brief history

The Activists for Social Alternatives (ASA) is a not-for-profit non-governmentalorganisation (NGO) registered as a public charitable trust, working for the developmentof poor and vulnerable in the central part Tamil Nadu (TN), a south Indian state. ASAstarted its operations in 1986 in the drought-prone Marungapuri block of Tamilnadu, withthe objective of addressing the rights of the downtrodden and the exploited, most of

whom belonging to the Dalit community. ASA formed issue-based Sangas of such people and built sustainable institutions out of such groups through education,conscientisation, skill based training, capacity building and lobbying and advocacy.Watershed and communal issues were the entry point activities during the initial years.During the developmental efforts ASA has undertaken and implemented several reliefactivities including drought and flood relief activities. Through the 20 years of closeassociation with the community at grassroots ASA has acquired competence in buildingsustainable Community Based Institutions, owned and managed by the people for theirbenefit.

During the late eighties, ASA found that rights and issues based formation of groupsmight not ensure sustainability of the groups. It was found that once the issue at hand gotresolved the group tended to disintegrate. There was also the growing realisation thateconomic empowerment could be the strongest base for social, cultural and politicalempowerment of the poor. The search for a strategic tool which would help in achievingthe multiple objectives of ensuring sustainability of the groups, provide economicprogress and a platform for political, social and cultural empowerment, so that themultifaceted poverty is addressed holistically, ended with the exposure of ASA to the

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microfinance. It was the time, when the global organizations working for povertyreduction, realized the need for a sustainable economic empowerment activity for thepoor. The early nineties found the Visionary behind the institution, Mr. Devaraj and hiscolleagues visiting Bangladesh studying the various models of microfinance such asGrameen, Myrada, Sewa etc. that had resulted in a home grown model of microfinance at

ASA that could suit to the prevailed conditions in Tamilnadu then. These effortsculminated in the adoption of MF as the entry point activity that helped in better outreachof the program and for building sustainable groups for empowerment on social, political,cultural and economic grounds.

The microfinance program started in 1993 was registered as a separate entity, the GramaVidiyal (GV) Trust in 1997 due to the need for a separate organisational structure andsystems to meet the demands of the program. GV operates with the mission of improvingthe standard of living of members and provides the structure for delivery of MF-plusservices of ASA aimed at political and social empowerment. GV, after ten years ofexperience of managing an integrated MF program GV has developed competence to runan MF program.

The overall strategy of ASA-GV is based on these competences developed, integratingthem for addressing the multi-dimensional poverty. ASA promotes groups and createspeoples structure to which GV provides microfinance services for economic progress.ASA provides a wide range of microfinance-plus services through various programs tothe members held together by the MF program for their social and political progress.

Today GV is one of the largest microfinance institutions in the India reaching out toabout 80 thousand poor families with an annual growth rate of over 100 percent and ASAinvolves in uplifting the vulnerable, Dalit and women in particular, with the same initialvigour.

2.2.2.3. Objectives

The objective of ASA-GV is aimed at achieving the mission and vision with optimumutilisation of resources. ASA-GV is following the integrated approach to povertyalleviation taking MF as entry point and utilising the platform created for social andpolitical empowerment of women. The members are federated at various levels, whichform the backbone of the microfinance activities. The federation formed is active inlobbying and advocacy as well. The official organisational structure and the parallelfederation structure of the members together form the vehicle for the services rendered byASA-GV to the members. ASA-GV uses internationally accepted tools like Housing

Index to target the poor and avoid non-poor in the program.

To work for the upliftment of socially and economically deprived sections of the ruralpeople.

To on-lend / lend to Grama Vidiyal SHGs groups formed for activities under-takenfor the Environmental, Economic and Social upliftment of its members.

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To work for the sustainable development of the society through communityorganizing, capacity building by providing education, housing and addressing localissues

To create employment opportunity through micro credit and enterprises development.

To work for the holistic empowerment of the women and the community.

To involve in lobbying and advocacy for micro and macro issues.

2.2.2.4. Organizational culture, leadership, innovation (S, M)

Vision, Mission of the organization disseminated / published /exhibited as per thefollowing:

1. Vision, Mission is printed in flex (in local language) and pasted in all the branches2. All the pass books (which members of the program uses) are printed with vision,

mission in local language - tamil3. In the center meeting, all the members take oath through member awareness song,

member pledge, organization vision and values, etc in all the 50 weeks over theyear.

ASA-GV from the inception believes in participatory approach in every aspect such asin policy level, implementing level, assessing impact, etc. ASA has two sets of parallelorganization structure staff and member to balance the operations. One of the mainreasons for success of ASA-GV and its microfinance program is the federation ofSHG members and leaders

MF Program Administration and Women's Participation Structures

Credit ProgramAdministration

Level

Credit ProgramActivities

Women'sParticipation

Structure Level

"Plus" or Women'sDecision-Making &

Participation

Activities

ASA-GV as a

whole

5 Zones,16 divisions(200,000 women)

Total Staff: 209

Meet quarterly todiscussperformance andproblems in thedivisions,sustainabilityissues, funding

needs andmonitoring andevaluation

ASA Federation of

women SHGs

Apex federationpresident along withCMD and otherboard membersconstitute the Board

of the ASA

In the same meeting,the 4 divisionpresidents may raisedevelopment issuesaffecting the womenin their area and seekadvice or material

support from ASA.

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Division

6 Branches(24,000 women)60 Total Staff4 Admin staff

64 Branch staff

Meets monthly todiscussperformanceissues andproblems in the

division

Federation of

Branches

6 branch presidentselect 1 divisionallevel president.

In the same meetingbranch presidentscan raisedevelopment issuesor social problems

brought up in branchmeetings and plansfor their solutiondeveloped.

Branch

8 Clusters(4000 women)10 Total Staff:

1 BranchManager1 Accountant

8 Field Officers

Meet monthly todiscuss savingsand loantransactions,problems in thebranch

Federation of

Clusters

100 Center Leaders5 member cluster-wise elected boardmembers elect onepresident of the

branch who serveson the divisionfederation

In same meeting,training sessions orawarenesscampaigns held, areaproblems discussed,development issuesraised and solutions

proposed.

Cluster

25 Centers(500 women)geographicadministrativegrouping only

One field officercovers one clusterassisting intransaction of 25centers (500women)

Cluster

20 Centers Leaderselect 5 ClusterLeaders to serve onBranch board.geographic groupingfor election purposesonly

Once a year thecenter leaders andrepresentatives meetto elect a leader fromtheir geographiccluster to the boardof the branch.

Center4 or more SHGsvillage-based(20 women)

Meets weekly forsavings and loantransactions,decisions on loansanctionsdiscussed

Center4 or more SHGsone elected centerleader

In same meeting,training sessions orawarenesscampaigns held, areaproblems discussed,development issuesraised

Self Help Group

(SHG)

5 poor women

Meets weekly tocollect savings,loan payments,discuss new loan

sanctions,repaymentproblems

Self Help Group

5 poor womenone elected leader

Peer support givenas needed (inmeetings or atanytime)

Member

1 poor woman

1 field officercovers 400 women

Saves, borrows,takes insurance,attends meetingsand participatesin credit

Member

1 poor womanMeets with SHG,attends Centermeetings, electscenter leader,receives training,

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decisions of andcenter

participates on areaissues activities

ASA-GV has a special project for staff to carry out independent innovation project ondifferent areas such as cost control, optimum use of internet, phone, monitoring

system, reducing drop out, developing new product, etc. where each department orindependent staff can choose any of the subject and do the innovation project toimprove the efficiency of the organization in different level. This project is assessedand honoured by the management team which supplement their designation band inturn increase their salary and incentives.

2.2.2.5. Organizational structure, roles and responsibilities (diagram may be helpful)

The organisational structure reflects the strategy adopted by ASA-GV for achieving itsmission. There are two major divisions, one for microfinance activities representing GV

and the other for Microfinance Plus activities of ASA.

Mr. S. DevarajFounder/Chairman/MD

S. Devaraj has nearly 30 years of

experience in the developmentsector

Mr. Devaraj is the founder andDirector of both ASA and GramaVidiyal Trust

Prior to founding ASA, Mr. Devarajextensively studied voluntaryorganisations around India on aUNDP fellowship

Board of Directors TEXT CUTOFF

GVMFL seeks a mixed Board ofDirectors composed of

promoters, external investors,and independent directors

Leadership

GVMFLs leadership will reside withChairman and MD S. Devaraj,

along with Arjun Muralidharan,CEO, D. Shirley, COO, and adiverse and experienced seniorteam

Ownership

Currently promoters equity amountsto USD 0.5 M. GVMFL plans to

raise approximately USD 5.8 M by2011

GVMFL seeks strategic investors thatwill not manage the dailyoperations, but will offer technicaladvice and strategic support

Arjun Muralidharan,CEOGeneral Manager GV?

Arjun Muralidharan came to GVTwith experience from GE Capitalin strategy building and

implementation though financialanalysisUnder Mr. Muralidharans

leadership, GVT obtained anNBFC license from RBI,significantly expanded outreachand increased ROE to 21%

D. Shirley,COOGeneral Manager-ASA?

D. Shirley comes from GE Capitaland is responsible for operationsand new product development

Ms. Shirley expanded GVTspresence from 8 to 18 districts,

doubled membership and tripledloan outstanding

Ms. Shirley has introduced thedivision and zone structure to

improve operational monitoring

Governance, Ownership, & Leadership

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MANAGING DIRECTORMANAGING DIRECTOR

MANAGERMANAGEROPERATIONS

MANAGERMANAGERFINANCE

GENERAL MANAGERGENERAL MANAGER

(MICROFINANCE)

HRM

MIS

PUBLIC RELATIONS

EDP &SOFTWARE DEVPT.

DOCUMENTATION

DEPARTMENTS

FUND MANAGEMENT

ACCOUNTS

MONITORING DEPT.

PLANNING &BUDGETING

INTERNAL AUDITING

DEPARTMENTS

DIVISION (DISTRICT)

BRANCH (BLOCK)

GRAMA VIDIYALGRAMA VIDIYAL


(MICROFINANCE PLUS)

MANAGERMANAGERSYSTEMS

ASA PROJECTSASA PROJECTS

MANAGERMANAGERPROJECTS

MANAGERMANAGERTRAINING

MANAGERMANAGERS.S.S.

NATURALRESOURCE MGT

CHILD LABOUR

SCHOOL

TRAINING TOMEMBERS

TRAINING TO

STAFF

MEMBERINSURANCE

LIVE STOCK

INSURANCE

PENSIONFOR

MEMBERS

VIDIYAL MAT.

SCHOOL (VMS)

TRAINING TO

OTHER NGOS

MANAGING DIRECTORMANAGING DIRECTOR

MANAGERMANAGEROPERATIONS

MANAGERMANAGERFINANCE


(MICROFINANCE)

HRM

MIS

PUBLIC RELATIONS


DOCUMENTATION

DEPARTMENTS

HRM

MIS

PUBLIC RELATIONS


DOCUMENTATION

DEPARTMENTS

FUND MANAGEMENT

ACCOUNTS

MONITORING DEPT.

PLANNING &BUDGETING

INTERNAL AUDITING

DEPARTMENTS

FUND MANAGEMENT

ACCOUNTS

MONITORING DEPT.

PLANNING &BUDGETING

INTERNAL AUDITING

DEPARTMENTS

DIVISION (DISTRICT)

BRANCH (BLOCK)

GRAMA VIDIYALGRAMA VIDIYAL


(MICROFINANCE PLUS)

MANAGERMANAGERSYSTEMS

ASA PROJECTSASA PROJECTS

MANAGERMANAGERPROJECTS

MANAGERMANAGERTRAINING

MANAGERMANAGERS.S.S.

NATURALRESOURCE MGT

CHILD LABOUR

SCHOOL

TRAINING TOMEMBERS

TRAINING TO

STAFF

MEMBERINSURANCE

LIVE STOCK

INSURANCE

PENSIONFOR

MEMBERS

VIDIYAL MAT.

SCHOOL (VMS)

TRAINING TO

OTHER NGOS

Organogram

The Head Quarters (HQ)

The Head Quarters consists of two teams for implementing the integrated programs ofboth ASA and GV. At the apex is the Chairman of the Board of Trustees and ManagingDirector (CMD) who is assisted by General Managers of GV and ASA. The GeneralManagers and the Managers together form the Core Management Team (CMT) at thepolicy level, which consists of professionals and personnel with long experience in thefield. A few Officers assist the CMT in day-to-day operations. The Officers are in chargeof various departments in the HO. Each HO employee has a dual role, one in HO andanother in the branch. This serves two purposes. It helps ASA-GV to be in touch with the

ground level even after the growth and in utilising the experience of HO staff foroperations.

The Division

The jurisdiction of each Division, headed by a Divisional Co-ordinator (DC), is a District.The DC will act as the HO representative in the Division with monitoring responsibilities.Each division has separate divisional offices in each district. The divisional offices

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manage the portfolio of credit and credit plus services being carried out by about 10branch offices.

The Branches

The Branch Manager, who reports to the DCs, heads the Branch. A mature branch, which

caters to about 3000 clients, has one Branch Manager (BM), an Accounts Manager andsix to eight Field Managers (FM). Each branch is equipped with good infrastructure,which includes computers, telephone and Internet. The branch personnel are responsiblefor the implementation of credit and credit plus services at the grassroots.

2.2.2.6. General qualifications and profile of field staff

The field staff is generally graduates in commerce, maths, arts, etc. they are recruitedthrough written test and personal interview. They are appointed as trainee field officersfor three months to take theoretical and practical training on the program. The induction

training is conducted as residential course for three days at ASA training center by thetraining team. The training consists of lectures, written test, group discussion, role play,assignments, etc which value their performance through performance scoring system.

The staff experienced in working with poor people may not be possible to recruit. ASArecruits fresh graduates and train them on both theoretical and practical aspects. SinceASA-GV has the operations in around 20 districts, more than 10000 villages through theexisting 800 staff, ASA used to have references from the field who are familiar in theculture, economic situation of the poor and villages. Many of the recently recruited staffare from member community group and around 30-40% are female.

2.2.2.7. Training/sensitization (of staff, managers, board) on mission and povertyoutreach

ASA-GV has a separate training department consist of two senior management staff withtwo training co-coordinators. The team takes care of the trainings for staff in all level. Asper the following table different level of staff are getting different kinds of training.

Board members and senior management team are regularly attending different nationalinternational level training, workshops, conferences and visiting different organizationsfor updating the program and MF sector. The divisional managers and the zonalmanagers and the core team members are acting as resource persons for the training tothe field level staff. Some special guests professors from management institute and

colleges are invited for special trainings such risk management, personality development,communication skill, etc.

ASA has been adapting an integrated approach to its economic empowerment andCommunity Development programs. The community is being organized usingmicrofinance as the entry point activity. The sustainable delivery of the services focusingon socio-political empowerment of women largely depends on the platform formed bycredit programs. Hence there was a potential threat to view the activities merely as a

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credit program. ASA realized the need for increasing the focus on developmentprograms, so as to keep pace with the growth of credit services. ASA aimed at achievingthis objective by training its staff and women leaders on effective integration of creditand credit plus activities.

Various segments of people associated with ASA-GV targeted by the Capacity Building

exercises in the previous year is shown in the following diagram.

Figure 02 : Target segment of CB programs

Training of Trainers (TOT): Prior to the implementation of capacity building programsfor various segments, such as field personnel, leaders and members of the organization,ASA prepared its middle-level staff and development professionals for the intendedtraining exercises. This was achieved through a series of TOTs which were carried outduring the previous year for the members of the Core Management Team, senior staffmembers and members of ASAs in-house training department.

Field Personnel: ASA adopts an integrated approach to poverty alleviation aimed at theholistic development of the poor. The value of the services offered to its end-users largelydepends on the effectiveness of ASAs field personnel. During the period 2004-2005,division-wise specialized training programs were carried out for the field staff, in order toimprove their productivity and efficiency, without losing the emphasis on socialdevelopment and the poverty focus.

Leaders: More than 80% of the capacity building program conducted during theprevious year targeted the leaders of ASA-GV. Both internal and external resourcepersons were engaged for the training initiatives.

These training programs are intended to create a conceptual understanding of specific

social issues affecting the vulnerable segments of the community. Following are some ofthe areas focused under capacity building exercises during the last year

A. Dalit Empowerment: The staff and leaders were trained to identify andaddress issues affecting the rights of Dalits.

B. Gender Perspectives: ASA organized training programs for members as wellas staff, aimed at helping them understand the issues and problems faced by

6.94%10.13%

80.11%

2.81%

Management Staff

Field Staff

Leaders

NGO Leaders

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women. The training programs covered the legal rights of women, and recoursesavailable to them when faced with domestic violence, dowry and other issues.

C. Political Rights: During the previous year, ASA had organized series oftraining programs for selected federation leaders to prepare them for upcomingPanchayat Raj elections (local self-government).

D. Livelihood and Self Employment: Selected members were trained onlivelihood promotion and self employment skills for running sustainable micro-enterprises.

E. Federating and Networking: The members of ASA-GVs microfinance program are federated at various levels of the organizations. These CBassignments were helpful to strengthen the federations for effective lobby andadvocacy for addressing large scale issues.

F. Training on Centre Manual: ASA had developed a centre training manualwith 104 indicators of social and political empowerment of women. ASA hadconducted branch level training programs for the leaders on using the manual.These training programs are being followed by the field personnel, who facilitatethe usage of the same during weekly centre meetings.

G. Credit Programs: The capacity building exercises on credit programs werehelpful to achieve the internal vision of the program to equip the women to ownand manage the program.

2.2.2.8. Incentives for poverty outreach (S, M)

The salary system is based on performance. This system takes into account themember outreach. However, there is no indicator that links with the poverty level ofnew members recruited.

Non financial and financial programs are implemented independently by theindependent team of ASA and GV, monitored by Chairman and Managing Director.

9%

9%1%6%

3%

45% 27%Dalit Perspective

Gender Perspective

Political Rights

Livelihood and Self employmen

Federating and Networking

Credit Programmes

Centre Manual

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There is no tension between two lines of operation as a result of common leadershipand governance.

2.2.2.9. Governance

Refer to attachment for the board of directors.

The role of the board as follows:1. to give strategic direction to the company2. arriving at the policy3. signing the legal documents with bankers and financial institutions4. reviewing operations, budgeting, financial projections, etc5. approval of the audited financials etc

Being ASA and GV are charitable organization; both organizations are managed bythe board of directors and no investors. When GV transforms into a company, then the

NBFC will have shareholders who will have ownership and management control ofthe company.

Main stakeholders are the members, staff and management. They are hencerepresented in the governance. One woman member sits on the board.

2.2.3. MF and MED services

The products and services are not exclusively for the very poor clients. All the MF andMED services described below are for all clients of ASA. The services offered basedon the demand and capacity of the clients.

2.2.3.1. MF model and products/services.

More information on the products and services is provided in Section 5.

ASA-GV offers collateral free loans to women belonging to poor families mainly forincome generation purposes. Consumption and housing loans are also provided takinginto account the need and circumstances. These loans are given on the basis of groupguarantee. Repayment is also ensured through weekly centre meetings in small affordableinstallments.

GVT

Product Term

Repayme

nt Interest Loan Size

GeneralLoan 1 year Weekly 12% INR 10,000

SpecialLoan

6months Weekly 5% INR 2,000

Business 1 or 2 Weekly 12% INR 40,000

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Loan years

HousingLoan

3 - 5years Weekly 12% INR 50,000

ASA-GV is also offering savings facility to its members. Savings and credit are offeredduring the centre meetings, which is usually conducted by the FM every week. Eachcentre has twenty members who will elect their leader. During the centre meetings theelected Centre Leader (CL) will collect the instalment due and hand it over to the FM,who will update passbook. Various issues related to MF as well as others are discussedduring the meetings. The FM will update the database in the office after conducting themandatory loan utilisation check.

Social Security Scheme (SSS)

Since the credit and credit plus programs make the women to become an indispensablepart of the family, it increases the dependency of the family on productive women.

Hence, ASA

asa case study final

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