MF/MED SERVICES FOR VERY POOR PEOPLE

PROMISING APPROACHES IN
CASE STUDY OF ACTIVISTS FOR SOCIAL ALTERNATIVES IN INDIA

Prepared by:
Gaamaa Hishigsuren
MEDA

Acknowledgement: I would like to acknowledge the inputs provided by ASA staff

members, especially SenthilNathan, Murali, Pravin and Vijay.
 TABLE OF CONTENTS

Executive Summary.............................................................................................................i
1. Context ...........................................................................................................................1
1.2. Local context – target area.......................................................................................2
2.1. International Organization.....................................................................................14
2.2. Local organization.................................................................................................14
3.2. Socioeconomic conditions.....................................................................................31
4. Poverty Targeting and Assessment...............................................................................33
4.1. Poverty measurement practices..............................................................................33
4.2. Available Poverty Data..........................................................................................35
4.3. Poverty Targeting...................................................................................................39
5. Products and Services...................................................................................................40
5.1. Financial Products..................................................................................................40
5.2. Microenterprise Development Services.................................................................42
5.3. Non-financial Services...........................................................................................45
5.4. Design and Product Development: .......................................................................50
5.5. Implementation Process ........................................................................................57
6. Results...........................................................................................................................59
6.1. Method of measuring results..................................................................................59
6.2. Impact....................................................................................................................61
6.3. Cost Effectiveness and Sustainability ...................................................................65
Title of Project/Program:
Organization Name(s): Activists for Social Alternatives
Location – Country: India
Author(s): Gaamaa Hishigsuren
Month/Year: August 2007

SEEP Network’s Poverty Outreach Working Group’s MF/MED Approaches Targeting

Very Poor People

Case Study No. X

4
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 drought
prone, 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 the
exploited, most of whom belonging to the Dalit community. ASA formed Sanghas and/or societies
of such people and built sustainable institutions out of such groups through education,
conscientization, skill based training and capacity building and lobbying and advocacy. Watershed
was the entry point activity during the initial years. During the developmental efforts ASA has
undertaken and implemented several relief activities including drought relief and flood relief
activities. Through the 20 years of close association with the community at grassroots ASA has
acquired competence in building sustainable Community Based Institutions, owned and managed
by 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 group
tended to disintegrate. There was also the growing realization that economic empowerment could
be the strongest base for social, cultural and political empowerment of the poor. The search for a
strategic tool which would help in achieving the multiple objectives of ensuring sustainability of
the groups, provide economic progress and a platform for political, social and cultural
empowerment, so that the multifaceted poverty is addressed holistically, ended with the exposure
of 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 of
other NGO/MFI projects for learning the principles of MF and designing an MF program to suit
the needs of ASA. These efforts culminated in the adoption of MF as entry point activity for ASA
in 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 Vidiyal
Trust in 1997 due to the need for a separate organizational structure and systems to meet the
demands of the program. GV operates with the mission of improving the standard of living of
members and provides the structure for delivery of MF-plus services of ASA aimed at political
and social empowerment. GV, after ten years of experience of managing an integrated MF
program GV has developed competence to run an MF program.

The overall strategy of ASA-GV is based on these competences developed, integrating them for
addressing the multi-dimensional poverty. ASA promotes groups and creates people’s structure to
which GV provides microfinance services for economic progress. ASA provides a wide range of
microfinance-plus services through various programs to the 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 to about
numerous very poor families with an annual growth rate of over 100 percent.

Grama Vidiyal Women Micro-credit Program:

i
The micro-credit program was implemented through the women federation of Grama Vidiyal
which is a mile stone development of ASA in the efforts of economic empowerment of the poor
women. Grama Vidiyal was started in the year 1995 through women federation which is an
offshoot of ASA to attain its vision. The Grama Vidiyal women are the users, managers and
owners 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 the
program. 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 housing
index and PRA wealth ranking tools, the poverty level of target group clients is identified. There
are 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 or
service exclusively for the poorest clients as they are not merely a sub-segment: they define
ASA’s 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 with
common cause, should have same age group and should follow the group norms. In the same way
four such groups are formed and united to have one centre with 20 members where a common
leader for administering the centre activities. In a branch, there are 150 centers. Every week,
centre meeting takes place where a common centre song and member’s pledge and staff pledge is
followed.

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

The loans are disbursed through ASA-Grama Vidiyal to meet the multidimensional needs of
income generation activities such as cottage industries, small scale trades and industries, basket
making, 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. The
number of loans disbursed is 699, 726 with a total amount disbursed accounting to USD 78.37
million.

Credit Plus development Programs:

ii
 ASA Grama Vidiyal has adopted Micro Credit scheme as a tool for eradicating poverty and
to the betterment of poor women. Further, to attain the vision, ASA has been rendering various
developmental schemes for the welfare of the needy women. One among the development efforts
is forming of women federation of Grama Vidiyal. The federation of women has a three-tier
system 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 all
members meeting is held once in a year. In the yearly all members meeting, the issues pertaining
to women rights, political rights and also social problems and policy level changes are discussed
and resolutions are also arrived.

Besides Micro Credit program, ASA also work for the cause of poverty alleviation through
Watershed development program, women empowerment program, dalit empowerment program,
Matriculation School for the members’ children and Child labor eradication program, social
welfare program, and Insurance scheme and also organizes training programs. Moreover, ASA has
adopted impact assessment tools such as ILS internal learning System, PLP Participatory learning
process 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 agencies
and likeminded agencies, ASA has been making constant efforts to implement innovative models
of others in its areas of operation. One among such efforts is the implementation of ICT
information and communication technology program to help the rural poor women to access the
information. Results of the ICT program include helping educated, unemployed youth find
employment and helping the poor access various government welfare programs.

International Women’s Day:

Every year the celebration of international woman’s day program is organized in all the
branch areas through Grama Vidiyal federation. Through this program the unity and integrity are
strengthened and also awareness education is given on the problems relating to women, violence
against women, rights of women. Besides this, the members interact with each other and share
their different kind of experience they had in their areas. An exhibition of different products of our
members is also organized through which best entrepreneurs are encouraged and a strong market
linkage is built to help each other.

Moreover, through best entrepreneurs, the members who need skill up gradation training is
offered and the government officials are also introduced to the members, out of which, they could
easily 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 roles
and responsibilities as per the legal purview and also motivated to participate in the local
governance to achieve the goal of political empowerment. Moreover, the members are provided
with the loan to contest in the election and also all the other members are motivated to support our
members and vote for her. In this manner, the participation in the local self governance and
creating best administrators in the political scenario to attain sustainable development is enhanced.

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

MEDP (Micro Enterprises Development Program:

Through the MEDP (Micro Enterprises Development Program), ASA provides professional
training support to its beneficiaries for improving the quality of the product and to enhance their
entrepreneurial skills. The program also benefits the members to exhibit their products through
the vidiyal model stalls in every branch by which the products become popular and the common
vidiyal members products exhibitions are also organized during special meetings and celebrations
like International women’s day celebration, training programs and etc., Through this program a
strong mentoring support and linkages linkage is created among our members by which the
members 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 “CHEERS”
which is a government project to eliminate child labor problem and to educate and rehabilitate
child 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 also
identified and given assistance to continue higher education.

Program Details (as of February 2006):

Child labor schools - 5
No. of Child laborers benefited - 140
Previous year Beneficiaries - 234
No. 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 their
longstanding dream come true. The members were longing to give good quality education to their
children 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 to
build sustainable development by exterminating poverty. So that attainment of its aim is not very
far off dream, because the process is already initiated and the future of the members children is
being cherished with best environ. More than 75% of the people of India live in the villages. The
real development of India lies in the development of villages. The school adopts the best
curriculum with well qualified and experienced teaching staff. The school campus is well
equipped 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 better
future for our members.

iv
Results

ILS –Internal Learning System:

ILS –Internal Learning System is a participatory impact assessment program of ASA to study the
impact of the program by using simple pictorial diaries. This program was implemented to learn
the real development of the members. Through the pictorial diaries, the women learn by
themselves and make a note about how they run their enterprises successfully by getting loans
from Grama Vidiyal. are of two types. This project was launched in October 2002 and the diaries
are designed to use for three years. It helps us and members to make a comparison between the
development of this year and last year. Moreover, the members and organization are able to
understand 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’ feedback
on the products and services. It is a participatory approach and assists the organization to learn the
strengths and gaps in the program, hence improve continuously. On a participatory method, the
information is collected and a common data base is created and updated at the time of loan
disbursement. Moreover, by conducting sample survey and focus group discussions with drop out
members, exited members and present clients, the feed back is collected to know the wider impact
of the program and to make refinements in the program to make it more beneficial and people
friendly.

Impact findings

Above all, the poor women have proved that they are credit worthy and there is concrete and
significant growth in their life through this scheme and also their status in the family as well as in
the society has been enormously enhanced. There is no doubt that the women federation has been
a force of instigating the welfare and upliftment of the poor. Moreover, the women federation is
helping the poor women by not only providing loans for the enterprises but also up gradation of
their 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 high
level of landlessness, few productive assets, low literacy, and poor living conditions for
newly joined members. Over time, ASA members are able to make significant
improvement in their productive activities. With the help of their loans ASA participants
have repaid debts, reclaimed mortgaged land, started new enterprises, reinvested in or
improved existing ones, or changed activities. Long-term ASA members in particular were
able to increase their ownership of land and livestock assets and improve their conditions
of work with respect to workspace, inputs and markets.

1
Noponen, ASA Impact Study Report, 2004.

v
 The women members of ASA are mostly active participants in the household
economy retaining sole or joint decision-making control of the use of the loan, the
operation of the business and the use of the profits. Gender relations were generally good
with low levels of violence and abuse overall. There were improved gender-results for
long-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 are
also more physically mobile visiting important government institutions and participating
by speaking out more in public meetings. The improvement in productive work activities
and greater role played in home, workplace and community activities for long term ASA
women members has gone in step with improved family well-being and living standards
for their households. Long-term ASA members enjoy improved housing conditions and
report greater satisfaction with nutrition and health care access. There was a higher rate of
school attendance and greater gender equity and corresponding lower rate of child labor for
long-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 by
incidents of suffering deprivation or using exorbitant moneylender loans, or taking help of
group 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 high
satisfaction rating marks to their own involvement in the program, the functioning of their
center group and the treatment and services rendered by field officers. Long-term ASA
members were even more satisfied on these issues than newer members.”

Below are three tables that present ASA’s 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 58%
(Housing Index score of less than 4) 3
% of entering clients defined as Poor (Housing 37%
Index score of 5-8)
% of entering clients defined as Non-poor 5%
(Housing Index score of greater than 8)
% of clients women 100%
Poverty focus: Design, Geography, Targeting, D, G, T, M, C
Screening, Motivation, Culture of organization
Average loan size4 US$106

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

vi
 Table 2: Impact5
ASA GV
% all clients experience reduction in economic 63%
poverty
% very poor clients experience reduction in 65.7%
economic poverty
% client experiencing increase in voluntary 70%
savings
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
75
1.1 Total Number of Staff
2
75
1.2 Micro Finance
2
2.0 OUTREACH
1
2.1 Number of Districts
7
7
2.2 Number of Branches
2
3,96
2.3 Number of Villages
0
12,82
2.4 Number of Centers
0
12,82
2.5 Number of Groups
0
40,93
2.6 Number of Peer Groups
9
203,1
2.7 Number of Members
76
3.0 MEMBERS
186,3
3.1 Number of Borrowers
28
27,06
3.2 Number of Insured Persons
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 the
program. Information is retrieved from MIS as of March 2006.
7
ASA MIS report, July 2007. More info on financial ratios is in Section 6.

vii
4.0 SECURITY DEPOSIT
117,977,9
4.1 Amount of Security Deposit
83
5.0 PORTFOLIO
729,4
5.1 Number of Loan Disbursed
23
3,270,139,2
5.2 Amount of Loan Disbursed
55
2,597,342,7
5.3 Amount of Loan Repaid
14
672,796,5
5.4 Amount of Loan Outstanding
41
6.0 PERFORMANCE
6.1 Rate of Repayment 99.54%
6.2 Portfolio At Risk (PAR) 0.62%

PERCENTAGE OF WOMEN
7.0 100%
MEMBERS

viii
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 effectiveness
include: streamlined branch offices, low cost field operations by minimizing the staff visits to
centers (while empowering center leaders to take more responsibilities and leadership) and using
information and communication technology to improve efficiency in data management. As a result
of such cost effective innovations, ASA has been able to cover its costs from internally generated
revenue with operational self sufficiency of 100% and financial self sufficiency of 95% by 2005,
as noted in ASA’s 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 institutional
sustainability. ASA always believes in participatory development approaches and thereby adopts
the policy of 100% transparency and maintain accountability among its target clientele groups and
staff. The organization structure itself is streamlined with well defined roles and responsibilities
with which the aims and objectives are set to reach the vision of the organization. ASA has
designed responsive welfare schemes to its staff members.

The staff members are given 8.33% of their salary from the management with which a
same amount is also deducted from the monthly salary and the same is added to their savings and
when 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 work
allowance 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 strong
motto to serve the poor communities especially the poorest of the poor women. The mission is
communicated and is followed in every layer of the organization. Also, ASA encourages its
members to take active role in decision making and management of the organization by promoting
federation of women members, hiring women members as community field officers and branch
managers. Also, ASA is constantly changing its products and services in response to the changing
demand of its target market. ASA is highly innovative and open to new ideas and experimentation
with new technology. In addition, the following are identified as the strengths in the rating report
that 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.com
9
Ibid.

ix
 - 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 important
for further improvement of its programs and institutional sustainability. The most recent rating
report by M-GRIL pointed out that ASA is not authorized to mobilize savings, yet it collects a
security amount of 5%. If ASA does not refund this amount at the end of the
loan term, ASA is exposed to the risk of penal action by the regulators. The
main weakness is really has to do with ASA’s current legal status. For more than
two years now, ASA has been contemplating transformation into an NBFC-Mutual Benefit Trust
structure for its microfinance program. Although, the organization has received the required initial
equity for the registration of the NBFC, lack of clarity with the structuring of the equity capital
among 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 aware
of the challenges during the transformation that could lead to mission drift, such as focus on
profitability, quantity versus quality, and alike. The governance and senior management team
continues to adhere to ASA’s social mission to serve the very poor women.

OPPORTUNITIES

Opportunities include:
• GVMFL’s 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). Most
competition comes from Tier II MFIs in Tamil Nadu (e.g. SMILE, BWDA, Sarvodhaya, IASC)

THREATS

Unfavorable external environment: Although the Tamil Nadu Prohibition of

Charging 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 regulatory
framework differentiating MFIs from moneylenders.

x
1. Context
1.1. Country Socioeconomic and Poverty Data

Table 1.1. Country Statistics

1.1.1. National Currency INR

Amount Year
1,065,070,60 July
1.1.2. Population (millions)
7 2004
324 July
1.1.3. Population density per square kilometre
2004
Urban :
27.78% July
1.1.4. Percentage urban / rural population
Rural : 2004
72.22%
6.5% March
1.1.5. Inflation
2007
INR 40.46 May
1.1.5. Nominal Exchange Rate (current, X Currency per US$1)
2007
1.1.6. PPP Exchange rate
0.611 July
1.1.7. HDI value
2004
126 July
1.1.8. HDI ranking
2004
3,737 July
1.1.9. GDP/Capita (PPP US$)
2004
1.1.10. Local currency equivalent of $1-a-day international INR 10/day July
poverty line 2004
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
179.33 Nov
1.1.18. Malaria cases (per 100,000 people)
2000
1.1.19. Population undernourished 20.0% 2006
1.1.20. Children underweight 79.4% 2006
Male 70.2%
1.1.21. Adult literacy 2006
Female 48.3%
Male 90.0%
1.1.22. Net primary enrolment ratio 2006
Female 87.0%
Male 53.7%
1.1.23. Net secondary enrolment ratio 2006
Female 45.7%
1.1.24. Physicians per 100,000 people 59.7 2004

1
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 2000
1
Explain how the national poverty line is defined:

The poverty line in India measures only the most basic calorie intake, recording not
nutrition but only the satiation of hunger. At present the poverty line stands at Rs 368 ($9
USD) and Rs 559 ($14 USD) per person per month for rural and urban areas, just about
enough to buy 650 grams of food grains every day. A nutritious diet itself would cost
around Rs 573 per capita per month, not to mention the other costs of securing other
basic needs such as clothing, electricity, shelter and healthcare. This total should push
India’s poverty line to 840 Rs ($21 USD) per person per month, about $2.15 USD when
adjusted 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 of

1.2 billion people, live on less than $1 per day (World Bank, 2004). The majority of them
live 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 world’s poor. 70% of India’s over 1
billion inhabitants live in rural or semi urban areas. 26% or 260 million people live below
the poverty line of $1 per day (World Bank, 2004). Poverty and rural development
remains the number one issue in India.

Government estimates show that over 250 million people are left without proper
access to credit despite a network of 33 thousand rural and semi urban branches of
commercial banks, 14 thousand branches of Regional Rural Banks (RRBs) and 92
thousand outlets of cooperatives (Planet Finance, 2002). The poorest people very often do
not comply with the norms that banks set for accessing credit. They neither have salary
certificates nor the required collateral to show as security against the loan. In India, the
poorest 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 poor
therefore remain perennially debt-ridden which ultimately results in them loosing their
dignity.

To date in India, over an estimated 8 million poor people (mostly rural women)
benefit from microfinance services (Chakrabarti, 2004),10 thereby leaving a vast unmet
10
This estimate is based on the outreach of NABARD’s bank linkage program as of 2002. At the time of
the dissertation research, there was no systematic estimation of the number of poor reached by

2
demand for developing credit, savings and insurance activities which is termed as
microfinance services targeted at what is until today referred to as the non-bankable
sector. The perpetual dependence of the rural poor on various informal sources of credit,
widespread unemployment, illiteracy and non-availability of technical support to such
households 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 women
vary from at least US$ 3.3 billion on the basis of a minimum need of US$ 44.4 per family
to US$ 11.1 billion (Planet Finance, 2002). The latter estimate envisages that
approximately 75 million households would need microfinance, of whom 60 million
families will be in the rural areas while the remaining 15 million families would be in the
urban areas. The annual credit usage by rural households is assumed to be Rs. 6,000 per
household, while for the urban poor households an average of Rs. 9,000 has been
estimated. In addition to the demand for credit, there is demand for other financial
services, such as insurance. The credit estimates indicated above also do not include the
requirement of funds for housing.

A rough estimate of the supply of credit to the poor includes about Rs. 97 billion
disbursed by the banks during 1997-98 under various schemes including the government
sponsored poverty alleviation programs (Planet Finance, 2002). Another Rs. 1,37 billion
covering around 100 million families had been disbursed up to September 1998 through
SHG 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 for
growth 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 a
total 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 small
projects whose total microfinance clients were not reported.

3
  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 of
drought and decreasing soil productivity. Migration, bonded labor, contract labor, and
child labor are still common in the area. Most of the craftsmen are in perpetual
indebtedness to their contractors. About 80% of the population is from the social and
economically depressed classes that hold only 20% of the land. Child marriage, violence,
female infanticide and prostitution that exist in the area clearly demonstrate a hostile
environment for women. Caste politics, communal violence and the rising atrocities
against dalits (a scheduled caste, formerly known as "untouchables"), much of which is
directed towards women, in central Tamil Nadu has led to an overall erosion of human
values.

4
 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 - 12996
Population - 55,000,000
Below Poverty line - 20,000,000

Women in Tamilnadu

TN Government has consistently claimed the superiority of its schemes for

women’s welfare, vis-à-vis other states. However, the ground reality is cause for a grave
concern. 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 female
literacy rates has continued: 51% versus 74% in 1991. Of all women, the dalit and rural
women are even more disadvantaged: 35% and 44%, respectively. Drop-out rates of girls
have been higher than those of boys. While the drop-out rate of girls at the primary stage
has decreased from 25% in 1984-85 to 16.5% in 1998-1999, these drop-out rates
accelerate sharply at the higher levels of education.

Access to health care service is another concern. There are indications that
medical 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% and
urban: 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 position
of women at work in TN. The majority of the working women are employed in cashew
nut processing, cotton spinning, match factory and alike.

The working Group on Women’s Development in 9th Five Year Plan reported that
“Violence 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 unequal
power relations, which has led to men’s domination over and discrimination against
women. Thus violence against women, throughout their life, comes to be socially
sanctified.” Over the past decade, there has been a growing awareness of this disturbing
phenomenon, and its long-term impact on the development and empowerment of women.
The study conducted by People’s Watch reveals that the crimes connected to women are
interlinked. For example, sexual harassment, eve teasing and molestation often end in

5
either murder or suicide. Among the total 582 instances of violence against women, 191
are related to dowry related violence.

Women and Governance

The Indian Constitution, through the instrument of adult franchise and Article 15
which prohibits discrimination on grounds of sex, guarantees political equality to women.
Such political equality is hardly exercised by the women of India, including in Tamil
Nadu state. The 73rd Amendment of the Indian Constitution, by legislating a compulsory
33% reservation for women in all local governing bodies, has brought about a significant
change. At the village Panchayats level, women form 33.7% of members and hold 33.8%
of president’s positions. At the Panchayat Union level, they form 35.3% of members and
hold 36.1% of chairperson’s positions. At the District Panchayat level, they form 34.7%
of members and hold 35.7% of chairpersons’ positions. But, in other levels of political
power and decision making the situation of women remain dismally low, both in the
country 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 of
Andhra Pradesh, Kamataka, Tamilnadu and Punjab…” (Ministry of Finance, 1999).
Estimates of child labor in Tamilnadu have been difficult to compile, given the highly
unorganized, 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 based
on enrolment data of the Department of School Education show that nearly 2800,000
children in the 5-14 age group were out of school in 1996-97. Experience at both policy
and grassroots levels in states like Kerala has clearly shown that the only effective answer
to the problem of child labor is to ensure that all children of school-going-age are in
schools (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 persist
across women vs. men, rural vs urban, dalit vs. non-dalit and poor vs. wealthy. Thus,
it is important to look at social development by categories, as opposed to as a whole
at 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 such
priority sectors, such as women, dalits, rural poor and children.

1.2.1.2.1. Ethnic groups

6
 With a population of over a billion, India is a country of striking contrasts and
enormous 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 that
make up India's federation are larger than most countries. Thirteen states have more than
20 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 natural
resources, 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 more
than 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 25.3
percent 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 income
generating activities exist but the poor lack access to working capital for achieving a
sustainable 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 spent

millions of rupees for dalit welfare, Tamilnadu (TN) has a poor record of empowerment
of dalit communities. Most of the caste clashes involving dalits, in the recent past in TN
are linked to visible disparities in terms of access to productive resources like land and
credit, to the disadvantage of the dalits.

Dalits, as per the 1991 census, form 19.18% of the total TN population, higher
than the national average of 16.48%. Significant majority of the dalits (nearly 80%) still
live in rural villages (Tamilnadu People's Forum for Social Development, 2001). Lands
owned by dalits form only 7% of private lands in TN. This property is mostly
unproductive and less fertile. Combining of the above two factors (80% of dalits live in
rural villages and majority of them do not own land) results in most of the dalits being
involved 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 seasonal
income.

The right to education, like the right to own land, has been denied to dalits by the
traditional caste system over the centuries. While overall in TN about 40% of the
residents remain illiterate, as high as 60% of dalits are illiterate. The situation is even
more tragic in the case of dalit women, vis-à-vis non dalit women. Compared to a nearly
50% literacy rate for non-dalit women in TN, not even 30% of dalit women are literate.

7
 Great disparity between dalits and non-dalits is also found in terms of quality
health care. The higher mortality rate and death rate for the dalits in rural areas is due to
lack 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 the
total SC and ST population, 62.8% and 36.3%, respectively, were landless agricultural
laborers. 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% of
the urban population. By the same report, the literacy rate was 46.7% among SC
population, in which women’s literacy was 34.9%. Jacob & Bandhu (2002) claim that at
least 80% of the total dalit population is concentrated in the rural areas and that the vast
majority of them are landless agricultural workers, which reveal the situation of dalits as
the bottommost layer of society. More than 85% of the total SC population in Tamil Nadu
remains 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 other
financial institutions/services accessible by the poor.

The financial sector in India has gone through three broad phases. During the first
phase until the 1960s, pursuing developmental objectives through the financial sector
focused primarily on delivering agricultural credit through cooperatives. During the
second phase, the government also established the Integrated Rural Development
program (IRDP) in 1980-81 to direct subsidized loans to poor self-employed people
through the banking sector. Over almost two decades IRDP extended assistance to about
55 million families. The second phase culminated in 1989 with the official loan waiver
which undermined what was left of any credit discipline. The third phase was started by
the financial crisis of the early 1990s leading to the first significant economic
liberalization measures, including reforms in the financial sector. These included the slow
restructuring of the commercial and regional rural banks, the freeing of some interest
rates, the consolidation of the government’s self-employment schemes, the introduction
of Local Area Banks, the introduction of Mutually-aided Cooperative Societies (MACS)
autonomous of government control and other such measures. This process of
restructuring 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 lending
activities other than commercial banks.

8
 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, also
emerged, as did a range of specialized Microfinance organizations (MFIs). By the end of
the 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 set
up by the Small Industries Development bank of India (SIDBI). Again, an exception was
the interest rate cap imposed by the Tamil Nadu State Government, which had significant
implications on the microfinance activities.

By April 2001, 285,000 SHGs had received loans from 41 commercial banks, 166
regional rural banks (RBBs) and 111 cooperative banks, with an average loan per group
of Rs. 18,000. India had nearly 400 million people living below or just above an austerely
defined poverty line. Approximately 75 million households therefore need microfinance.
Of these, nearly 60 million households were in rural areas and the remaining 15 million
were 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 40
million households in 2000. The remaining 35 million households were perhaps meeting
their credit needs through the informal sector. Furthermore, while there is an increasing
supply of financial services and all bank groups met the overall targets under priority
sector lending, there were shortfalls under sub-targets set for agricultural advances.
Advances to the agricultural sector by public and private sector banks amounted to 15.8
percent of their net bank credit (Government of India, 2003). Micro-finance institutions
have arisen because of the gap between demand and the formal sector’s limited supply.

Summary of the organizational profile of the financial sector

According to the Reserve Bank of India, MicroFinance institutions (mFIs) are those
which provide thrift, credit and other financial services and products of very small
amounts mainly to the poor in rural, semi-urban or urban areas for enabling them to
raise their income levels and improve living standards". mFIs have emerged broadly
under 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, 1956

ii. 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,

9
 1956 Banks which provide mF along with their other usual banking services could be
termed 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 cooperative
banks, which both take deposits and extend loans, although a significant part of their
lending funds come from NABARD.
c. The Post Office, which provides savings as well as insurance services, and the
National Small Savings Organization, which sells deposit instruments.
d. Non-banking finance companies (NBFCs), very few of which are allowed by the
Reserve bank, to take deposits. Within NBFCs, there is a special category called
residuary non-banking companies, or RNBCs, which are allowed to raise an
unlimited amount of deposits, as long as 80 per cent of it is put in government and
bank 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 and
centers.
b. Mutual-benefit MFIs, especially cooperatives, some like the Self-Employed Women’s
Association (SEWA) Bank registered as urban cooperative banks, while new ones,
especially in Andhra Pradesh, are increasingly emerging as MACS under the new
cooperative acts.
c. For-profit MFIs incorporated as non-banking financial companies such as BASIX and
SHARE Microfinance Limited.

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

10
 being felt that a suitable national policy framework is essential for an orderly
development of the mF sector.

Self-help Groups (SHGs) in Tamil Nadu

Self-Help Groups (SHGs) have been promoted by the state government in recent
years. Originally initiated in May 1989, in 75 blocks of 8 districts of TN, with assistance
from the International Fund for Agricultural Development (IFAD), the program as of
2001 covered all the 368 blocks in the 28 districts of TN. According to Tamil Nadu
Corporation for Development of Women (TCDW) data of September 2000, the total
number of SHGs in TN functioning in three phases was 45, 719. The total number of
women 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 SHGs
of varied grades in 8 villages in the 3 districts of Dharmapuri, Ramanathapuram and
Madurai, 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 formations
b. 43% belonged to the very poor households
c. 21.5% of the members belonged to women-headed households
d. 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 households
b. Targeting, particularly to the backward households, may require greater attention
c. 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 various
estimates put the requirements of microcredit at Rs.150 billion to Rs.500 billion per year
and an additional Rs.10 billion is estimated for housing per year. As against these
estimates, 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 (cumulative
up to September 1998), suggesting a vast unmet gap in the provisions of financial
services to the poor. Incidentally, about 36 per cent of the rural households are found to
be 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 poor
people reached?

11
Debt and Investment Survey, Government of India, 1992

11
 There is no reliable data on this. ASA has assessed the poverty level of its clients
mostly using their own internal mechanism, such as Housing Index, proxies in
member application form and internal learning system. Also, ASA participated in the
testing 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. Poverty
1.2.4.1. Existing Poverty data and geographic areas of the country where extreme
poverty is most concentrated.

Poverty has been endemic and persistent in Tamil Nadu. The percentage of people
below poverty line declined from mid-1950s to early/mid 1960s, but went up later. From
the early 1960s to 1980s, about 50% of Tamil Nadu population was continuously below
the 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 has
steadily deteriorated, leading to serious deprivations and dire lack of basic services in
slums. 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 is
an educationally advanced state with a general literacy rate of 62.66% compared to the
national average of 52.21%. It ranks third among major states with regard to general
literacy and in female literacy rate. However, according to the NSS Organization survey
conducted in 1998, there is disparity due to gender: 80% of the males are literate whereas
only 60% of the females are literate. There is also disparity due to social status of the
population. The literacy rate for the dalit, especially female dalits is lower than the state
average: 39.5% for dalits and 29.5% for dalit women, 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 the
extreme poor state.

ASA is planning to expand its services to serve the unmet demand of the poorest in the
neighboring 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

12
1.2.4.4. Main determinants of poverty.

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

13
 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
2.2.1.1. Name of the organization or
institution
2.2.1.2. Geographic area of operation
2.2.1.3. Legal structure
2.2.1.4. Registration status
2.2.1.5. Regulation status
2.2.1.6. Date established
2.2.1.7. Specialized (MF/MED) or
multisectoral
2.2.1.8. Start of MF/MED activities
2.2.1.9. Core business (f.i. credit,
savings, …)
2.2.1.10. Business model
2.2.1.11. Target market – MF/MED
Observations
The Activists for Social Alternatives (ASA)
Grama Vidiyal
Tamil Nadu, Southern part of India
Public charitable trust
ASA - 31/1986 9th April, 1986 under public
charitable trust act
GV – NBFC
In India, NBFCs non banking financial
companies registered under companies act
1956, 45 IA RBI registration is considered to be
regulated.
Trusts are monitored by income tax department
of finance ministry of Govt of india, registrar of
trusts and socities, Home Ministry of Govt of
india, etc.
ASA - 1986
GV – 1995
ASA – Rights based Issue based development
programs
GV – Microfinance
1993
1. Credit
2. Savings
3. Insurance
4. Business loans (Individual loans)
5. Loans for poorest segment (special
loan/multipurpose loan)
Grameen type microfinance
poorest of the poor community in tamil nadu at
present. ASA-GV may expand to other states in
future.
14
 Issues Observations
2.2.1.12. Number of clients/participants Total members – 203176
– MF/MED Total borrowers - 186328
2.2.1.13. Number of staff 752

2.2.2. Organizational development (S)

2.2.2.1. Mission and vision

ASA-GV’s vision is “A value based, poverty free, productive, prosperous, humane and
sustainable “Grama Vidiyal” Family.” The internal vision is to become “an organization
owned by members and managed by professionals” in the medium term and to be “an
organization owned, managed and used by women” in the long term.
The mission is “To empower women of the poorest families socially, economically and
politically through networking them into community institutions and through efficient
poverty alleviation and microfinance program”.
The overall approach of ASA-GV can be summarised as “from women to families and
from 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-governmental

organisation (NGO) registered as a public charitable trust, working for the development
of poor and vulnerable in the central part Tamil Nadu (TN), a south Indian state. ASA
started its operations in 1986 in the drought-prone Marungapuri block of Tamilnadu, with
the 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 relief
activities including drought and flood relief activities. Through the 20 years of close
association with the community at grassroots ASA has acquired competence in building
sustainable Community Based Institutions, owned and managed by 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 got
resolved the group tended to disintegrate. There was also the growing realisation that
economic empowerment could be the strongest base for social, cultural and political
empowerment of the poor. The search for a strategic tool which would help in achieving
the multiple objectives of ensuring sustainability of the groups, provide economic
progress and a platform for political, social and cultural empowerment, so that the
multifaceted poverty is addressed holistically, ended with the exposure of ASA to the

15
microfinance. It was the time, when the global organizations working for poverty
reduction, realized the need for a sustainable economic empowerment activity for the
poor. The early nineties found the Visionary behind the institution, Mr. Devaraj and his
colleagues visiting Bangladesh studying the various models of microfinance such as
Grameen, 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 efforts
culminated in the adoption of MF as the entry point activity that helped in better outreach
of 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 Grama
Vidiyal (GV) Trust in 1997 due to the need for a separate organisational structure and
systems to meet the demands of the program. GV operates with the mission of improving
the standard of living of members and provides the structure for delivery of MF-plus
services of ASA aimed at political and social empowerment. GV, after ten years of
experience of managing an integrated MF program GV has developed competence to run
an MF program.
The overall strategy of ASA-GV is based on these competences developed, integrating
them for addressing the multi-dimensional poverty. ASA promotes groups and creates
people’s structure to which GV provides microfinance services for economic progress.
ASA provides a wide range of microfinance-plus services through various programs to
the 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 to
about 80 thousand poor families with an annual growth rate of over 100 percent and ASA
involves in uplifting the vulnerable, Dalit and women in particular, with the same initial
vigour.

2.2.2.3. Objectives

The objective of ASA-GV is aimed at achieving the mission and vision with optimum
utilisation of resources. ASA-GV is following the integrated approach to poverty
alleviation taking MF as entry point and utilising the platform created for social and
political empowerment of women. The members are federated at various levels, which
form the backbone of the microfinance activities. The federation formed is active in
lobbying and advocacy as well. The official organisational structure and the parallel
federation structure of the members together form the vehicle for the services rendered by
ASA-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 rural
people.
♦ To on-lend / lend to Grama Vidiyal SHGs groups formed for activities under-taken
for the Environmental, Economic and Social upliftment of its members.

16
♦ To work for the sustainable development of the society through community
organizing, capacity building by providing education, housing and addressing local
issues
♦ 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 the

following:

1. Vision, Mission is printed in flex (in local language) and pasted in all the branches
2. All the pass books (which members of the program uses) are printed with vision,
mission in local language - tamil
3. 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 the
year.

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

MF Program Administration and Women's Participation Structures

Credit Program Credit Program Women's "Plus" or Women's
Administration Activities Participation Decision-Making &
Level Structure Level Participation
Activities
ASA-GV as a Meet quarterly to ASA Federation of In the same meeting,
whole discuss women SHGs the 4 division
performance and Apex federation presidents may raise
5 Zones, problems in the president along with development issues
16 divisions divisions, CMD and other affecting the women
(200,000 women) sustainability board members in their area and seek
issues, funding constitute the Board advice or material
Total Staff: 209 needs and of the ASA support from ASA.
monitoring and
evaluation

17
Division Meets monthly to Federation of In the same meeting
6 Branches discuss Branches branch presidents
(24,000 women) performance 6 branch presidents can raise
60 Total Staff issues and elect 1 divisional development issues
4 Admin staff problems in the level president. or social problems
64 Branch staff division brought up in branch
meetings and plans
for their solution
developed.
Branch Meet monthly to Federation of In same meeting,
8 Clusters discuss savings Clusters training sessions or
(4000 women) and loan 100 Center Leaders awareness
10 Total Staff: transactions, 5 member cluster- campaigns held, area
1 Branch problems in the wise elected board problems discussed,
Manager branch members elect one development issues
1 Accountant president of the raised and solutions
8 Field Officers branch who serves proposed.
on the division
federation
Cluster One field officer Cluster Once a year the
25 Centers covers one cluster 20 Centers Leaders center leaders and
(500 women) assisting in elect 5 Cluster representatives meet
geographic transaction of 25 Leaders to serve on to elect a leader from
administrative centers (500 Branch board. their geographic
grouping only women) geographic grouping cluster to the board
for election purposes of the branch.
only
Center Meets weekly for Center In same meeting,
4 or more SHGs savings and loan 4 or more SHGs training sessions or
village-based transactions, one elected center awareness
(20 women) decisions on loan leader campaigns held, area
sanctions problems discussed,
discussed development issues
raised
Self Help Group Meets weekly to Self Help Group Peer support given
(SHG) collect savings, as needed (in
5 poor women loan payments, 5 poor women meetings or at
discuss new loan one elected leader anytime)
sanctions,
repayment
problems
Member Saves, borrows, Member Meets with SHG,
1 poor woman takes insurance, 1 poor woman attends Center
attends meetings meetings, elects
1 field officer and participates center leader,
covers 400 women in credit receives training,

18
 decisions of and participates on area
center issues activities

ASA-GV has a special project for staff to carry out independent innovation project on
different areas such as cost control, optimum use of internet, phone, monitoring
system, reducing drop out, developing new product, etc. where each department or
independent staff can choose any of the subject and do the innovation project to
improve the efficiency of the organization in different level. This project is assessed
and honoured by the management team which supplement their ‘designation band’ in
turn increase their salary and incentives.
Governance, Ownership, & Leadership

Board of Directors TEXT CUT

OFF
GVMFL seeks a mixed Board of
Directors composed of
promoters, external investors,
and independent directors
Ownership
Leadership
Currently promoters’ equity amounts
to USD 0.5 M. GVMFL plans to GVMFL’s leadership will reside with
Chairman and MD S. Devaraj,
raise approximately USD 5.8 M by
2011 along with Arjun Muralidharan,
CEO, D. Shirley, COO, and a
GVMFL seeks strategic investors that diverse and experienced senior
will not manage the daily team
operations, but will offer technical
advice and strategic support

Mr. S. Devaraj
Founder/Chairman/MD
S. Devaraj has nearly 30 years of
experience in the development
sector
Mr. Devaraj is the founder and
Director of both ASA and Grama
Vidiyal Trust
Prior to founding ASA, Mr. Devaraj
extensively studied voluntary
organisations around India on a
UNDP fellowship
Arjun Muralidharan,
D. Shirley,
CEO
COO
General Manager – GV?
General Manager-ASA?
Arjun Muralidharan came to GVT
D. Shirley comes from GE Capital
with experience from GE Capital
and is responsible for operations
in strategy building and
and new product development
implementation though financial
Ms. Shirley expanded GVT’s
analysis
presence from 8 to 18 districts,
Under Mr. Muralidharan’s
doubled membership and tripled
leadership, GVT obtained an
loan outstanding
NBFC license from RBI,
Ms. Shirley has introduced the
significantly expanded outreach
division and zone structure to
and increased ROE to 21%
improve operational monitoring

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 its
mission. There are two major divisions, one for microfinance activities representing GV
and the other for Microfinance Plus activities of ASA.

19
 Organogram

MANAGING DIRECTOR
GRAMA VIDIYAL ASA PROJ ECTS
GENERAL MANAGER GENERAL MANAGER
(MICROFINANCE) (MICROFINANCE PLUS)

MANAGER MANAGER MANAGER MANAGER MANAGER MANAGER

OPERATIONS FINANCE SYSTEMS PROJECTS S.S.S. TRAINING

DEPARTMENTS DEPARTMENTS NATURAL MEMBER TRAINING TO

RESOURCE MGT INSURANCE MEMBERS

HRM FUNDMANAGEMENT
MIS ACCOUNTS CHILDLABOUR LIVE STOCK TRAINING TO
PUBLIC RELATIONS MONITORING DEPT. SCHOOL INSURANCE STAFF
EDP &SOFTWARE DEVPT. PLANNING &BUDGETING
DOCUMENTATION INTERNAL AUDITING
VIDIYAL MAT. PENSIONFOR TRAINING TO
SCHOOL (VMS) MEMBERS OTHER NGOS

DIVISION (DISTRICT)

BRANCH (BLOCK)

The Head Quarters (HQ)

The Head Quarters consists of two teams for implementing the integrated programs of
both ASA and GV. At the apex is the Chairman of the Board of Trustees and Managing
Director (CMD) who is assisted by General Managers of GV and ASA. The General
Managers and the Managers together form the Core Management Team (CMT) at the
policy level, which consists of professionals and personnel with long experience in the
field. A few Officers assist the CMT in day-to-day operations. The Officers are in charge
of various departments in the HO. Each HO employee has a dual role, one in HO and
another 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 for
operations.

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

20
manage the portfolio of credit and credit plus services being carried out by about 10
branch 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 and
six to eight Field Managers (FM). Each branch is equipped with good infrastructure,
which includes computers, telephone and Internet. The branch personnel are responsible
for 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 recruited
through written test and personal interview. They are appointed as trainee field officers
for 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 the
training 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. ASA
recruits fresh graduates and train them on both theoretical and practical aspects. Since
ASA-GV has the operations in around 20 districts, more than 10000 villages through the
existing 800 staff, ASA used to have references from the field who are familiar in the
culture, economic situation of the poor and villages. Many of the recently recruited staff
are from member community group and around 30-40% are female.

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

outreach

ASA-GV has a separate training department consist of two senior management staff with
two training co-coordinators. The team takes care of the trainings for staff in all level. As
per the following table different level of staff are getting different kinds of training.
Board members and senior management team are regularly attending different national
international level training, workshops, conferences and visiting different organizations
for updating the program and MF sector. The divisional managers and the zonal
managers and the core team members are acting as resource persons for the training to
the 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 and
Community Development programs. The community is being organized using
microfinance as the entry point activity. The sustainable delivery of the services focusing
on socio-political empowerment of women largely depends on the platform formed by
credit programs. Hence there was a potential threat to view the activities merely as a

21
credit program. ASA realized the need for increasing the focus on development
programs, so as to keep pace with the growth of credit services. ASA aimed at achieving
this objective by training its staff and women leaders on effective integration of credit
and 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.

80.11%

M anagement Staff
F ield Staff
Leaders
NGO Leaders

10.13%
6.94% 2.81%

Figure 02 : Target segment of CB programs

Training of Trainers (TOT): Prior to the implementation of capacity building programs

for various segments, such as field personnel, leaders and members of the organization,
ASA prepared its middle-level staff and development professionals for the intended
training exercises. This was achieved through a series of TOTs which were carried out
during the previous year for the members of the Core Management Team, senior staff
members and members of ASA’s in-house training department.
Field Personnel: ASA adopts an integrated approach to poverty alleviation aimed at the
holistic development of the poor. The value of the services offered to its end-users largely
depends on the effectiveness of ASA’s field personnel. During the period 2004-2005,
division-wise specialized training programs were carried out for the field staff, in order to
improve their productivity and efficiency, without losing the emphasis on social
development and the poverty focus.
Leaders: More than 80% of the capacity building program conducted during the
previous year targeted the leaders of ASA-GV. Both internal and external resource
persons 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 of
the areas focused under capacity building exercises during the last year
A. Dalit Empowerment: The staff and leaders were trained to identify and
address issues affecting the rights of Dalits.
B. Gender Perspectives: ASA organized training programs for members as well
as staff, aimed at helping them understand the issues and problems faced by

22
 women. The training programs covered the legal rights of women, and recourses
available to them when faced with domestic violence, dowry and other issues.
C. Political Rights: During the previous year, ASA had organized series of
training programs for selected federation leaders to prepare them for upcoming
Panchayat Raj elections (local self-government).
D. Livelihood and Self Employment: Selected members were trained on
livelihood promotion and self employment skills for running sustainable micro-
enterprises.
E. Federating and Networking: The members of ASA-GV’s microfinance
program are federated at various levels of the organizations. These CB
assignments were helpful to strengthen the federations for effective lobby and
advocacy for addressing large scale issues.
F. Training on Centre Manual: ASA had developed a centre training manual
with 104 indicators of social and political empowerment of women. ASA had
conducted branch level training programs for the leaders on using the manual.
These training programs are being followed by the field personnel, who facilitate
the usage of the same during weekly centre meetings.
G. Credit Programs: The capacity building exercises on credit programs were
helpful to achieve the internal vision of the program to equip the women to own
and manage the program.

3%
45% 27%
Dalit Perspective
Gender Perspective
Political Rights
Livelihood and Self employment
Federating and Networking
Credit Programmes
Centre Manual
9%
6% 1% 9%

2.2.2.8. Incentives for poverty outreach (S, M)

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

Non financial and financial programs are implemented independently by the

independent team of ASA and GV, monitored by Chairman and Managing Director.

23
 There is no tension between two lines of operation as a result of common leadership
and 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 company
2. arriving at the policy
3. signing the legal documents with bankers and financial institutions
4. reviewing operations, budgeting, financial projections, etc
5. approval of the audited financials etc

Being ASA and GV are charitable organization; both organizations are managed by
the 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 of
the company.

Main stakeholders are the members, staff and management. They are hence
represented 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 and
MED services described below are for all clients of ASA. The services offered based
on 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 for
income generation purposes. Consumption and housing loans are also provided taking
into account the need and circumstances. These loans are given on the basis of group
guarantee. Repayment is also ensured through weekly centre meetings in small affordable
installments.

GVT Repayme
Product Term nt Interest Loan Size
General
Loan 1 year Weekly 12% INR 10,000
Special 6
Loan months Weekly 5% INR 2,000
Business 1 or 2 Weekly 12% INR 40,000

24
 Loan years
Housing 3-5
Loan years Weekly 12% INR 50,000

ASA-GV is also offering savings facility to its members. Savings and credit are offered
during the centre meetings, which is usually conducted by the FM every week. Each
centre has twenty members who will elect their leader. During the centre meetings the
elected 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 discussed
during the meetings. The FM will update the database in the office after conducting the
mandatory loan utilisation check.

Social Security Scheme (SSS)

Since the credit and credit plus programs make the women to become an indispensable
part of the family, it increases the dependency of the family on productive women.
Hence, ASA realized the need for a social security model that can help the women and
their family in s sustainable manner. Following are some of the social security products
offered under the SSS.

Life Insurance
The micro-insurance program at ASA-GV dates backs to 1993, when the
first micro-insurance program was introduced to the members. ASA
initially piloted an in-house model and currently outsourced the same and
woks the model in collaboration with mainstream insurance companies.

80,000 74,707

70,000

60,000
57,851

50,855
50,000

40,000

30,000
23,045

20,000

7,247 9,362
10,000 4,585
1,786 2,218 3,277

-
1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004-
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year

Figure 04 : Outreach of Micro-insurance over the years

25
The current insurance product has an affordable annual premium for a cover of Rs.
20,000 on death of a member due to any cause, including accidents. At present more than
55 thousand members are being covered under this insurance program.

Old age Income Security Scheme

ASA-GV’s Old Age Income Security Scheme, similar to the pension scheme offered by
the government, was yet another innovative social security product. The product
envisaged providing a comfortable and a peaceful life to the members of ASA-GV,
during their old age. The model was piloted for two years starting from 2002 and
currently under redesigning accumulating the learning and experience. Currently, this
service is not offered.

2.2.3.2. Description of main target group

ASA targets poor villages in blocks and districts that are not currently served by
alternative micro finance programs. In other words, ASA does not compete in the
geographic expansion areas of other NGOs. The target villages and women participants
are identified through a cost-effective targeting tool developed by ASA-sixteen-point
housing index and participatory rapid assessment (PRA) wealth ranking technique. The
preferred client lives in a house that scores less than 4 points on the ASA housing index.
This is typically a mud house with walls of less than 4 feet having a temporary roof made
either of thatch or old tiles. The typical poorest client household is a member of a
scheduled caste/tribe and is composed of husband, wife and four children ranging in age
from a few months to 10 or 12 years. Special preference is given to female-headed
households among the poorest. Client households have less than .5 or less acre of wet
land, or 1.5 or less acres of dry land and maximum of annual income (RS 12000.). Most
clients belong to the lowest caste (dalit).

2.2.3.3. Selection and/or eligibility criteria

See above for eligibility criteria.

Before ASA-GV could start its operations, a comprehensive needs assessment survey will
be conducted utilising the senior staff members and social auditors. The survey will be
conducted using Participatory Rural Appraisal (PRA) as the tool to collect data from
various sources such as district collector, Office of the Village Administrative Officers
(VAO), Panchayat leaders, Block offices, Taluk head quarters, villagers and local leaders
etc. A new branch office will be established after assessing the potentials. The staff
members of the branch will be given a orientation training for a couple of days about the
outcomes of the needs assessment survey, which would help them to gain specific
knowledge about the area to be covered by their branch office.
The member mobilisation and the community organisation will be initiated to identify the
potential women members who could really be benefited from the MF initiatives and
developments efforts of the organisations. The members are being identified using
internationally accepted tools such as housing index, wealth ranking and food index etc.

26
These members are then approached for forming groups who are then trained for a week,
which is called Compulsory Groups Training (CGT). A Group Recognition Test (GRT) is
then conducted to measure the readiness of the group for MF and other services.

2.2.3.4. Use of poverty assessment tool

ASA has been using a combination of several proxies to assess the poverty level of
potential clients. They include:

Housing index: ASA among many other MFIs has been using Housing Index as
its primary poverty targeting tool. This index is usually created as follows at ASA: A field
staff walks systematically through the villages selected as containing many poor people.
He/she looks at each house and compound, eliminating those that are large, in good
condition, and made from expensive materials. Houses that may or may not contain poor
or poorest households are indexed or scored based on locally relevant criteria. From the
inception, ASA has used two cut-offs in order to define three categories of poor and set
their primary and secondary target groups. The distinction are made (i) between the poor
and non-poor and (ii) of those identified as poor, between poorest and moderately poor.
On average, it takes field staff five minutes to index a house and determine an eligibility
score. A cut off score of total points is established to separate the houses of the poor from
those of the non-poor. Then, a cut-off score is established within the poor category to
separate the houses of the poorest from those of the poor. A sample study was carried out
in the beginning by the MFI to validate the cut-off score against household incomes.
Houses below the cut-off between poor and non-poor scores are listed and roughly
mapped as the field staff moves through the village.

Particulars Details
1 Size of building Big (4) Medium (2) Small (0)
2 Structure of condition Firm (4) Medium (2) Bad (0)
3 Roof material RCC/Pucca (4) Tiles/Asbestos (2) Thatch (0)
4 Wall material Brick with cement (4) Brick with Mud (2) Mud (0)

Cut-off points:
Greater than 8 points Less poor
4-8 points Poor
Less than 4 points Poorest

Those who are given housing index equal to below 4 points are considered to be
the poorest and are accepted as the primary target members. For those with a score of
above 4, additional screening indicators are used to identify if they qualify as secondary
target members: whether the value of all assets in the household indicates poverty,
whether or not she is on the Below Poverty Line (BPL) list issued by the state
government and whether the ration card indicates if she is eligible for government
subsidy (every five years, the state government assesses the poverty level of each
household and puts a stamp on those who are above poverty line, indicating those who

27
are without any stamp on their ration card are below poverty line and thus are eligible for
government subsidy). In general, ASA accepts those who are up to 8 points using the
combination of these screening criteria. This targeting commitment was made at the onset
of the microfinance program of ASA.

Monthly household income per capita: Income is a commonly used measure of

poverty as a flow of resources that enables individuals and households to sustain their
living. However, it has drawbacks such as not being able to capture the stock of resources
that may be available at their disposal. Also, there is a high probability of human errors in
reporting and recording income data. In the informal sector, income is usually not regular
and thus, it is almost impossible to accurately record. However, ASA looks at this
measure only in combination with other measures that will complement its weaknesses.

Caste: This is used as an additional indicator of poverty level of new clients who
joins ASA. Dalit or the lowest caste people in India are the most oppressed, marginalized
group. Within dalits, there are two main categories: Scheduled Caste/Tribe (SC/ST) and
Backward Caste/Other backward caste (BC/OBC). Of the two, the SC/ST people are
dalits and are socially most marginalized whereas the BC/OBC people are the
bottom/lowest level of non-dalit caste and are economically marginalized. In the mission
of ASA, the focus on dalit uplift receives significant emphasis along with the lowest level
of non-dalits.

Geographical distribution of membership: Poverty is generally more prevalent in

rural areas than in urban areas due to access to infrastructure, resources, service and
market (Valenzuela, 1998). From the onset, ASA has focued on rural areas with most
poverty concentration.

Economic Sector: Traditionally, some sectors are considered riskier than others such as
agriculture and manufacturing. Agriculture has a high seasonal demand and is dependent
on natural factors, such as climate, natural resources, and so on. Despite its risk and
dependency on nature, agriculture provides living for many poor people in rural areas
around the world. Manufacturing is also considered risky and has been avoided by
conventional lenders because manufacturing is perceived to have slow turnover and need
larger capital investment. ASA provides services to potential clients engaged in these
sectors for income generation.

2.2.4. Resources and external assistance

As of March 2005, ASA had a total asset of Rs. 291, 308, 144. The key lenders include:
Grameen trust, FWWB, ICICI bank, HDFC, SIDBI, UTI local commercial bank,
HUDCO, Grameen Foundation, Federal Bank, and Development Credit Bank.
(Please see attached files: Rating report by MGRIL and financial statement)

ASA had reached operational self sufficiency of 100% by 2004 and financial self
sufficiency of 103% in March 2007.

28
The summary of financial performance is below (as of July 2007):

2.0 OUTREACH
1
2.1 Number of Districts
7
7
2.2 Number of Branches
2
3,96
2.3 Number of Villages
0
12,82
2.4 Number of Centres
0
12,82
2.5 Number of Groups
0
40,93
2.6 Number of Peer Groups
9
203,1
2.7 Number of Members
76
3.0 MEMBERS
186,3
3.1 Number of Borrowers
28
27,06
3.2 Number of Insured Persons
4
4.0 SECURITY DEPOSIT
117,977,9
4.1 Amount of Security Deposit
83
5.0 PORTFOLIO
729,4
5.1 Number of Loan Disbursed
23
3,270,139,2
5.2 Amount of Loan Disbursed
55
2,597,342,7
5.3 Amount of Loan Repaid
14
672,796,5
5.4 Amount of Loan Outstanding
41
6.0 PERFORMANCE
6.1 Rate of Repayment 99.54%
6.2 Portfolio At Risk (PAR)12 0.62%

2.2.5. Relationships (networks, partnerships, other institutions)

2.2.5.1. Networks
12
Keys to this portfolio quality include good internal control system, loan assessment procedures, 5
member peer group pressure, good credit discipline, incentive system to staff for better performance, etc.

29
 ASA-GV is the primary member in Sa-dhan, a national level network, Grameen
Foundation USA, a global network, and MIX market, etc.

2.2.5.2. Partnerships

Partnership with Ford Foundation

Ford Foundation, which has been supporting the development initiatives of ASA for
almost the last two decades, has also extended support for the transformation efforts of
the microfinance program during 2004-05, with the prospects of partnering with ASA-
GV for future growth. The partnership with Ford Foundation comes with a support of
Rs.10 mln over two years, which will be used to improve the Capital Adequacy Ratio
(CAR) of GV. Ford Foundation has also provided grant support for transformation
training to staff as well as members, as well as for election of SHG leaders, and for
preparation of account books and accounting statements for the SHGs.

Strategic Partnership with SIDBI

Small Industries Development Bank of India (SIDBI), one of the foremost financial
institutions supporting microfinance in the country, has been one among the major
supporters of ASA-GV’s microfinance program, with SIDBI’s loans for onward
lending forming the highest proportion of ASA-GV’s total portfolio, during the past
two years. During 2004-05 the partnership with SIDBI reached new heights with their
generous support for onward lending at lower interest rates, soft loan for
transformation as well as additional support for capacity building.

High-Growth Partnership with Grameen Foundation

Grameen Foundation USA (GFUSA) is a global non-profit organization that combines
microfinance, new technologies, and innovative thinking to empower the world's
poorest people to escape poverty. Grameen Foundation has been a strategic partner for
a long time, actively supported investment in transformation and the relationship was
strengthened further through a “high growth partnership” agreement signed between
ASA-GV and GFUSA. The support for high growth will be in the form of funds for
onward lending, and support for capacity building.

Partnership with Unitus

Unitus is a not-for-profit organization based in US, with the mission of accelerating
the growth of microfinance institutions (MFIs) across the world. The Unitus
partnership with ASA-GV comes with support for software, training and staff
development and other capacity building support in addition to facilitating
transformation.

2.2.5.3. Other institutions

There are many NGOs, MFIs operating in Tamil Nadu. Each organizations follow
different model in implementing microfinance program. There is limited number of MFIs
that follow Grameen type microfinance. Most NGOs follow SHG bank linkage model

30
where they form groups and link it with the commercial banks. In relation to targeting,
ASA-GV only targets poorest segment, where other NGOs covers (mix of different class
of the community) medium class also.

3.2. Socioeconomic conditions

3.2.2. Economic conditions

3.2.2.1. Underemployment

On an average, in a week, those who rely on working for others are getting 4 to 5 days
of employment. It differs from area to area. The size of the wage is also varies from
area to area. For example, in the fertile areas (cauvery kind of river passing through)
the wages is little bit high than the other rural areas / drought areas. For the urban,
semi urban poor the wages is higher than the rural poor who work in agricultural lands
only. Urban poor do many small trades, micro enterprises such as selling vegetables,
fruits, etc. have auto, ricksaw, tri cycle, etc.

3.2.2.2. Income Sources

The income for the poor is mainly through wages or from livestock. Around 10% of
their income may come from micro-enterprises.

3.2.2.3. Land ownership

Fertile lands which are productive are mainly owned by rich people. Drought lands
only are owned by poor people. Generally poor have 1 to 2 acres of maximum dry
land and 0.5 acres of wet land maximum.

3.2.2.4. Asset ownership

In the rural areas every poor have their home. Most people have own houses in the
rural areas. However, the quality of the house varies widely. In the urban areas, only
very minimum community have own houses. Generally the poor construct the houses
in the government lands where at any time government may take over the lands.

In addition to house, most typically the poor may have few heads of livestock, poultry
and/or bicycle.

3.2.2.5. Income level

Daily wage levels for labor:

Rural areas:
Men : daily wages range from 50 to 100 daily
Women : daily wages range from 30 to 60 daily

31
 Urban areas:
Men : daily wages range from 100 to 200 daily
Women : daily wages range from 50 to 100 daily

3.2.3. Geographic conditions

3.2.3.1. Rural/urban, remoteness from trading centers and roads, population density

Urban areas have many markets large in size, whereas rural people have to move to
district quarters which are typically located within 40 to 50 kilometers. This is the
disadvantage for poor community to market their product they need to spend, travel a
long distance for getting better price.

Population density is higher in urban and lower in rural areas.

3.2.3.1. Access to markets

same as 3.2.3.1.

3.2.3.1. Access to banks

same as 3.2.3.1.

3.2.3.1. Access to doctors and clinics

same as 3.2.3.1.

3.2.3.1. Proneness to natural disasters

ASA operates in highly drought prone areas. Also, in Tamil nadu, around 12 districts are
Cauvery river belt districts. Flood affects communities during the rainy seasons. Around
10 districts are coastal areas. Tsunami kind of natural disaster affects these districts.
Around 10 districts are very drought prone, which has significant negative implications
on the livelihood of those who lives in the area.

3.2.4. Major vulnerabilities and risks encountered by target group (F, C)

Health problems cause indebtedness to the poor. Poor generally don’t have the social
security (lack of insurance policies) scheme covered for their loss of assets, health, loss of
lifes, etc, which is the major reason for poverty.

32
4. Poverty Targeting and Assessment

4.1. Poverty measurement practices

4.1.1. Poverty data collection

ASA collects poverty level data on all new clients at entry.

4.1.1.1. Which poverty indicators are collected?

Provided in Section 3.

4.1.1.2. What poverty assessment tool is used?

Again, ASA uses Housing Index as the primary tool for poverty assessment. In the
meantime, ASA has participated in the pilot testing of the Progress out of Poverty
Index (PPI) of GFUSA and Poverty Assessment Tool of USAID/IRIS. The latter two
are not fully institutionalized in ASA.

In the case of Housing Index, it is a participatory process. It is explained in Section 3.

4.1.1.3. When and how often are poverty data collected?

Data on Housing Index is collected every time a new member is admitted and every
year when the existing member applies for a loan.

4.1.1.4. Which clients are measured?

All incoming clients and repeat clients.

4.1.2. Use of poverty data

4.1.2.1. What, if any, are poverty categories distinguished by poverty data?

As explained in Section 3, there are three categories: Poorest, Poor and Less poor.

4.1.2.2. How are each of these categories defined?

Particulars Details
1 Size of building Big (4) Medium (2) Small (0)
2 Structure of condition Firm (4) Medium (2) Bad (0)
3 Roof material RCC/Pucca (4) Tiles/Asbestos (2) Thatch (0)
4 Wall material Brick with cement (4) Brick with Mud (2) Mud (0)

33
Cut-off points:
Greater than 8 points Less poor
4-8 points Poor
Less than 4 points Poorest

Those who are given housing index equal to below 4 points are considered to be the
poorest and are accepted as the primary target members. For those with a score of
above 4, additional screening indicators are used to identify if they qualify as
secondary target members: whether the value of all assets in the household indicates
poverty, whether or not she is on the Below Poverty Line (BPL) list issued by the state
government and whether the ration card indicates if she is eligible for government
subsidy (every five years, the state government assesses the poverty level of each
household and puts a stamp on those who are above poverty line, indicating those who
are without any stamp on their ration card are below poverty line and thus are eligible
for government subsidy). In general, ASA accepts those who are up to 8 points using
the combination of these screening criteria.

4.1.2.3. How are poverty data used by organization?

4.1.2.3.1. For client monitoring?

Data on Housing Index among new members is used for monitoring the performance
on outreach to the target clients: Increase in the proportion of new members falling in
less poor category would indicate management to take a closer look at whether or not
the target group of poorest has been reached.

Also, when compared over time, data on Housing Index of the same member indicates
change in the asset level of the member, hence impact indicator.

4.1.2.3.2. For client screening?

Before ASA-GV could start its operations, a comprehensive needs assessment survey is
conducted utilising the senior staff members and social auditors. The survey is conducted
using Participatory Rural Appraisal (PRA) as the tool to collect data from various sources
such as district collector, Office of the Village Administrative Officers (VAO), Panchayat
leaders, Block offices, Taluk head quarters, villagers and local leaders etc. A new branch
office is established after assessing the potentials. The staff members of the branch are
given a orientation training for a couple of days about the outcomes of the needs
assessment survey, which would help them to gain specific knowledge about the area to
be covered by their branch office.
The staff member then gathers information on potential members using Participatory
Wealth Ranking. Once potential clients are identified, the staff member visits the house
of the potential client to gather info on Housing Index.

34
 4.1.2.3.3. For client targeting?
More details to be provided under 4.3. Poverty Targeting

Housing Index is the primary targeting tool for ASA

4.1.2.3.4. For impact monitoring/assessment?

As explained earlier, a change in the Housing Index for repeat clients over time is used
as an indicator for tracking the change in the asset level of clients.

Currently, it is not used for product development.

4.1.2.3.5. For other uses?

Currently, it is not used for funding raising, PR, etc.

4.2. Available Poverty Data

4.2.1. Poverty distribution results by internal poverty data collection method

(1)Reaching the Poorest.13

ASA GV
% of entering clients defined as Very Poor (Housing Index 58%
score of less than 4) 14
% of entering clients defined as Poor (Housing Index score of 37%
5-8)
% of entering clients defined as less poor (Housing Index 5%
score of greater than 8)

4.2.2. Poverty data from a recent poverty and/or impact assessment study

In 2004, a cross sectional study was conducted by Hishigsuren (2004) to assess the
changes in the poverty outreach of ASA during the rapid scaling up. The study used a
mixed method consisting of surveys with 420 current and former clients, 18 focus group
discussions with 216 current and former clients, interviews with 3 front-line staff, 4 board
members, 3 representatives of funding agencies and two groups of management staff (20
in total).

First, the multi-dimensional pre-post quantitative data is analyzed.

Indicators used to measure mission drift15
13
Member database, 2006.
14
Analysis of Housing Index results is done using member database – Housing Index measured on every
new member at the time they enter the program.
15
Hishigsuren (2004). Scaling up and mission drift: can microfinance institutions maintain
a poverty alleviation mission while scaling up? Dissertation.

35
Indicator Definition
Depth of outreach
Average size of loans Average size of loans (in Rupees real terms)
Average monthly household income per capita (in Rupees in real
Household income terms)
Poorest Percentage of new members with Housing Index below 4 points
Percentage of new members with Housing Index between 4 and 8
Poor points
Percentage of new members with Housing Index above 8 points (the
Less poor scale is 0-16)
Percentage of new members who belong to lower caste, such as
Scheduled Caste, Scheduled Tribe, Backward Caste and Other
Dalit Backward Caste
Percentage of new members who belong to higher caste, such as
Non-dalit Forward and other Caste
Rural members Percentage of rural members
Agriculture loans Percentage of loans for agricultural purpose
Quality of outreach
Total number of active members divided by the total number of field
Case load officers
Total number of working hours per field officer is divided by the
average number of members per field officer (hours/case load) in
Time per member minutes
Satisfaction with
overall quality of Percentage of respondents said overall quality of service "Excellent"
service or "Good"
Satisfaction with Percentage of respondents said variety of products and service
variety of services "Excellent" or "Good"
Satisfaction with Percentage of respondents said FO quality of service "Excellent" or
member service "Good"
Scope of outreach
Financial services Number of financial services
Financial products Number of financial products

A percent change is computed in each dimension to find out whether there is any
drift considering the direction of change. The indicators in the first domain called Depth
of Outreach determine whether ASA has moved up the market and started serving better-
off people after the scaling up. The indicators in the second domain, Quality of Outreach,
measure whether there was any change in the quality of service and the level of members’
satisfaction with the services of ASA. Indicators in the third domain, Scope of Outreach,
measure if there is any change in the number and type of services offered by ASA due to
scaling up. Then, an average percent change is computed based on the percent changes of
each individual indicator. After computing the average percent change at an
organizational level, individual percent changes are computed for the three branches

36
selected for the study to represent rural, semi-urban and urban branches of ASA. This is
expected to reveal whether there is any mission drift due to the branch characteristics –
whether urban branches experience more mission drift than rural branches, or vice versa.

Second, two data sets of survey responses are created in order to identify changes
in the member profile that might have taken place during the scaling up. These data sets
represent two types of new members: those who became new members prior to the
scaling up (referred to as “Pre-2001”) and those who became new members immediately
after the scaling up (referred to as “Post-2001”). 210 members in each of these two
groups were randomly selected and interviewed in January 2004. To investigate possible
shifts in the member profile associated with the scaling up, the characteristics of the pre-
2001 new entrants are compared with those of the post-2001 new entrants on a set of
household, community and enterprise level socio-economic and demographic indicators
as well as their satisfaction with quality and variety of services. Finally, former members
are asked about the primary reasons why they are no longer participating in the program
and their satisfaction before they stopped participating. The indicators are listed below.
The responses on these indicators from the two groups were tested for statistically
significant difference using independent sample t-tests and chi-square statistics, a non-
parametric statistic for assessing the association between categorical variables.

Additional Indicators of Outreach

Indicators Definition
Socio-economic
profile
Gender Percentage of woman members
Age Average age of members
Civil status Percentage of members in each civil status
Education Percentage of members who has never gone to school
Income per capita Total household income of a member divided by the total
(Rp.) number of household members in Rupees
Percentage of members whose household receives at least one
Salary full-time wage
Percentage of children in member's family working to earn
Working Child income
Income per child
working Income per working child in the family (in Rps.)
Ownership status of member's housing at the time of the
Housing survey
Condition of the housing owned by those who reported to have
own house (less than 4 points=Poorest; 4-8 points=Poor and
Housing index more than 8 points=Less poor)
Percentage of members by food security scale that measures
the ability of members' family to have sufficient amount of and
Food security variety of food
Percentage of members who has own voluntary savings
Savings besides compulsory savings with ASA

37
Sector The sector of primary microenterprise financed by last loan
Program
participation
Number of loans Number of loans taken since becoming a member
Loan size Average size of last loan in Rupees
Loan term Average term of last loan in months
Use of loans Specific usages of last loans
Percentage of members receiving each specific service at the
Services received time of the survey
Other sources of Percentage of members who have access to other sources of
service services besides ASA
Satisfaction of
current members
Overall quality of Percentage of members who rated the overall quality of
service services as "Good" or "Excellent"
Percentage of members who rated the quality of member
Member service services as "Good" or "Excellent"
Percentage of members who rated the variety of services as
Variety of services "Good" or "Excellent"
Average number of hours spent with FO per month, as
Time spent with FO indicated by members
Change in the number of hours spent with FO per month at the
Change in time spent time of the survey compared with three years ago (prior to the
with FO scaling up), as indicated by the pre-2001 members.
Satisfaction of
former members
Proportion of former members who departed due to decisions
Decision to leave made by herself, her family, her group or ASA management
Proportion of former members who departed because of
reasons outside the program and business, or problems in her
Most important own business, or did not need capital, or problems with
reasons for departure borrowing in a group, or reasons related to ASA
Reasons for ASA or
borrowing group to Percentage of members who were expelled by her group or
expel a member ASA management due to specific reasons
Specific reasons for
member to depart that
were related to ASA
and borrowing in Percentage of members who departed due to specific reasons
group related to ASA and borrowing in a group
Overall quality of Percentage of former members who rated the overall quality of
service services as "Good" or "Excellent"
Percentage of former members who rated the quality of
Member service member services as "Good" or "Excellent"
Percentage of former members who rated the variety of
Variety of services services as "Good" or "Excellent"

38
 Percentage of former members who liked specific attributes of
Most liked attribute ASA
Percentage of former members who liked least specific
Least liked attribute attributes of ASA
Percentage of former members who suggested improvement of
Things to improve specific attributes of ASA

Summary of mission drift findings

Data on the above indicators indicated mixed messages as to whether or not ASA
has moved up to serve better off people and abandoned the poorest. Essentially, the
findings show drift from the poorest in some areas and no drift in others. It is important to
understand the reasons behind some of these findings and gain more in-depth knowledge
to determine whether or not ASA has indeed drifted away from the poorest. Qualitative
data from the FGDs with members, individual and group interviews with front-line staff,
management, board members and representatives provide more insights into the above
findings.

4.2.3. Poverty Data obtained through use of USAID certified poverty tool

4.2.3.1. Which USAID certified poverty tool was used? Which poverty criterion was
used: $1 a day or bottom 50% below poverty line?

ASA participated in the practicality testing of USAID poverty assessment tool.

However, because it was a practicality testing, ASA was told that the findings cannot
be used to report the poverty level of its clients.

4.3. Poverty Targeting

4.3.1. Does the organization use a poverty targeting tool?

The above mentioned Housing Index is used as the targeting tool.

In addition, geographical targeting and Participatory Wealth Ranking is used to identify

target communities.

Also, ASA’s products and services are tailored towards very poor women, hence they
serve as an indirect targeting.

4.3.2. What is the client poverty target level?

As explained above, those who are given Housing index score of below 4 are defined as
the Poorest.

4.3.3. Staff use of poverty targeting

39
 4.3.3.1. Training/sensitization (of staff, managers, board) related to poverty outreach

See Section 2.2.2.7

4.3.3.2. Staff incentive schemes

See Section 2.2.2.8

4.3.4. Issues with poverty targeting

One of the main challenges with Housing Index as the poverty targeting tool is that it
does not work the same way in urban areas as it does in rural areas. Also, the housing
conditions are changing as the government provides free housing to the poor (which are
in relatively good condition). ASA is looking at other cost effective and reliable poverty
targeting tools that can be adapted to the context of ASA

5. Products and Services

ASA targets the poorest of poor women. There are no distinct groups that are very poor
and less poor. ASA product development is based on the market research of their target
group, which is basically homogenous. There is no specific product that is exclusively for
the very poor clients since they are the core target clients of ASA and they define the
products.

However, there are different products offered to those who are more mature (grown
through the program) since their needs are different from those who are just starting
(lower level at poverty ladder). They are gradually integrated into the business loan
product as they successfully complete their first cycles and request for individual and
larger loan products.

There are no distinct credit officers exclusively serving the very poor the same as above.
However, Individual Business Loan Managers are being appointed in each of the
branches to asses the potential of the established members (economically poor) for
availing individual business loans, yet retaining them in the regular MF program.

While GV takes care of the delivery of the financial services to its clients, the poverty
initiatives such as the targeting, assessment of poverty status of the clients, impact
assessment etc. are being done by ASA utilizing the services of separate personnel.

5.1. Financial Products

Table 5.1. Microfinance Product Details
Product Features and Policies
5.1.1. microcredit

40
 Product Features and Policies
Individual loans disbursed through a group
using peer pressure
5.1.1.1. Individual or group product
5.1.1.2. Loan terms (maturity, interest
rate, interest type, flexibility)
5.1.1.3. Loan source
5.1.1.4. Loan use
5.1.1.5. Loan size (first loan, average
loan, maximum loan size)
5.1.1.6. Meeting requirement and
frequency
5.1.1.7. Mandatory savings requirement
and amount
5.1.1.8. Collateral requirement
5.1.1.9. Other eligibility requirements
5.1.1.10. Loan default policy
5.1.1.11. Repayment flexibility
5.1.1.12. Other
5.1.2. microsavings / Deposits
5.1.2.1. Individual or group
5.1.2.2. Savings Type
5.1.2.3. Deposit/collection location
5.1.2.4. Deposit frequency, amounts,
flexibility
5.1.2.5. Meeting requirement and
frequency
5.1.2.6. Savings terms (interest rate,
minimum deposit, …)
5.1.2.7. Withdrawal and savings use
policies
5.1.2.8. Record keeping and accounting Security deposit pass is issued
5.1.2.9. Investment of deposits
52 weeks, 12%, flat interest rate, loans can be
repaid in 6 months and can avail another loan
Borrowings from Commercial banks
Income Generation Activities and
Consumption purposes like medical expenses,
School fees for their children and emergency
needs.
First loan Rs. 5,000/-, Average loan
Rs.4,200/- Maximum loan Rs. 15,000/-,
Business Loan (Individual loan) Rs. 25,000/-
to Rs. 50,000/-
Weekly
Security Deposit. 10% of the loan amount
No collateral
Should have approval from their group
members, centre leader and the field officer.
The business loans (individual loans) are
given to 2 years old members with very high
credit record and guarantors.
The default should be borne by the Joint
Liability Group.
Loans are repayable in 52 weeks, pre closure
is available after 40th week.
Individual
Security Deposit
Branch
One time upfront for one loan cycle
Weekly
10% of the loan amount as Security Deposit,
no interest is given for security deposit
Withdrawal allowed only after closure of the
loan.
Kept in a bank account
41
 Product Features and Policies
5.1.2.10. Other
5.1.3. microinsurance -offered through a partnership with a formal insurance
company
5.1.3.1. Microinsurance Type Voluntary
5.1.3.2. Group or individual product Individual
5.1.3.3. Term One year
5.1.3.4. Eligibility requirements Should be a borrower
Should submit the set of required documents
5.1.3.5. Renewal requirements
once again for the 2nd year
The Insurance cover for our members is
compulsory one for those who are eligible.
There are some cases where the member does
5.1.3.6. Rejection rate not qualify (older than 59, or younger than
18). When a member dies, she is
automatically removed from the program.

5.1.3.7. Voluntary or compulsory Compulsory

Natural Death – INR 20,000/- Accidental
5.1.3.8. Product coverage (benefits)
Death INR 40,000/-
5.1.3.9. Key exclusions
INR 125 per annum for the borrower and INR
5.1.3.10. Pricing – premiums
200/- for the borrower and her spouse
Here premium is fully paid by the members.
The administrative cost for the institution is
5.1.3.11. Pricing – co-payments and
borne by the insurance company and the
deductibles
members (by paying extra premium)

5.1.3.12. Pricing – other fees See above

5.1.4. microgrants – N/A
5.1.4.1. Individual or group product NA
5.1.4.2. Amount (and number of grants)
5.1.4.3. Eligibility requirements
5.1.4.4. Grant use and other conditions
5.1.4.5. Savings requirement or matched
savings arrangement
5.1.4.6. Straight grant, no interest or
partial repayment
5.1.4.7. Other

5.2. Microenterprise Development Services

Table 5.2. MED Service Details
Service Types and Features
5.2.1. Training

42
 Service Types and Features
5.2.1.1. Financial Financial literacy is provided to members during the centre
literacy meetings on topics such as how to cut costs and maximize savings.
5.2.1.2. Business Advice on business planning is given to members based on need
planning and when they borrow loans covering topics on how to improve
management existing businesses, increasing both productivity and efficiency
Members’ products are linked with other members who are in need
5.2.1.3. Marketing of their products at the time of CC meetings, Federation meetings,
shandies (market) and markets
5.2.1.4.
Members are taught basic numerical skills such as counting
Recordkeeping
currency, recording weekly collections, denominations etc.
and bookkeeping
ASA has been providing number of skill development programs
that include training on production, marketing, quality control,
accounting and book keeping etc. as a part of its Entrepreneurs
5.2.1.5. Skill
Development Program. Besides these, ASA also does market
development
linkage programs and individual consultation program for enabling
them to do their business in a professional manner.

5.2.1.6. Technical
The same above
assistance
5.2.1.7. Training Group training at the Federation meetings, Grama Vidiyal Training
method Centre
5.2.1.8. Other?
ASA-GV has been collecting Rs.1 per member per week as the
membership subscription, which will be used for meeting the cost
(travel, food, lodging etc.) for the delivery of non financial services
that include the training programs, consultation services,
experience sharing campaigns etc. Some of the training programs
5.2.1.9. Costs to are being sponsored by the GV by meeting the cost from its
client operational income from the MF program. ASA for its part
provides training programs and other non-financial services
utilising the financial resources mobilised from domestic and
international donor organisations in the form of grants.

5.2.2. Business Consultancy and Advisory Services

5.2.2.1. Individual
Group
or group sessions
5.2.2.2. Frequency Need Based
5.2.2.3. Topics Entrepreneurial skills
ASA offers leadership skill building workshops, federating and
5.2.2.4. networking activities, policy advocacy campaigns for building
Confidence confidence level of the women members and to make them
Building recognize their strength in union.

43
 Service Types and Features
5.2.2.5. Other
5.2.2.6. Costs to See above
client
5.2.3. Market Linkages

ASA has been providing market linkage services to its women entrepreneurs that help
them build new alliances to penetrate the market potentials in a better way. Branch level
database of enterprises are being maintained so as to enable the women to build network
of business activities and to widen the scope of marketing.

Among the GV members community, we organize trade type

entrepreneurs and production type entrepreneurs, and make them
5.2.3.1. Input
have linkages
supply

5.2.3.2. Marketing
Linking members to other members
Assistance
Kiosks in some areas supply this kind of information, this is not
5.2.3.3. Market
operational in all the branches (Kiosks provide info on current
Information
price)
5.2.3.4. Producer
The same as above
organizations
5.2.3.5. Business
The same as above
linkage promotion
5.2.3.6. Quality
NA
Control
5.2.3.7. Other
5.2.3.8. Costs to
See above
client
5.2.4. Other

44
 Service Types and Features
Children of the women members find job opportunities with the
microfinance program. Out of the present workforce of more than
800, about 15-20% of the staff members were identified from the
families of the women members.

ASA’s Vidiyal Institute of Information Technology (VIIT) was

established exclusively to provide IT related education to the poor
youth from the rural areas to improve the job opportunities in the
IT related industries. The Vidiyal Information Services Providers
(VISP) is yet another initiative from ASA to provide IT enabled
services to the poor rural community through educated youth
5.2.4.1.
capable of providing the services through village internet kiosks
Employment
owned by the women members of ASA-GV.
generation
50 members turned as field officers from community.

Centre leaders (leader for 20 members), cluster leaders (leader for

500 members) and federation leaders (leader of 4000 members). W

10,000 centre leaders, 1000 cluster level leaders and 100 federation
leaders. Among these leaders potential women leaders apply to
field officer positions.

20 kiosks in Trichirapalli and Pudukottai districts which

implemented as pilot projects. After a detailed study ASA may
expand in all other operational areas. The services offered by the
kiosks include e-governance services, e-commerce services, market
5.2.4.2. information, matrimony information, government schemes and
Technology their forms and applications, filing grievance petitions with
development government missionaries, etc are the primary services. The other
services such as xerox, printing, telephone booth, etc will also be a
part of their (kiosk owners) business.

5.3. Non-financial Services

Vidiyal Information Service Provider
The Vidiyal Information Service Provider (VISP) is a joint initiative of ASA-Grama
Vidiyal, Grameen Technology Centre (GTC), USA and Drishtee Foundation, New Delhi.
The project is an innovative attempt to integrate microfinance with ICT to benefit the
poor through e-governance and other ITE services. Currently the service is being offered
to the people in Pudukkottai and Tiruchirappalli districts through 20 internet kiosks.

45
 Rights-based Programs
The rights-based programs are the community development activities of ASA, where
ASA-GV has close to two decades of experience. These activities are aimed at protecting
the rights of the vulnerable communities in rural areas, such as women and the Dalit It
also aimed at achieving the holistic empowerment of clients challenging oppression and
unfair practices against them. Following are some of the rights based programs of ASA
A. Political empowerment
B. Dalit Empowerment
C. Women Empowerment
D. Land rights programs
E. Trade Justice

Entrepreneur Development Service

EDS program aims at supporting the livelihood and income generation activities of ASA-
GV’s members. The staff members are given training to identify the potential
entrepreneurs who can utilize this supporting service to the fullest. The potential
members from the branches are being identified utilizing the services of the field
personnel. The selected members will be trained through series of training programs on
various areas such as production, manufacturing, branding, labeling, marketing etc..
Apart from the training exercise business advisory services and market linkage services
were also provided to the members for promoting sustainable and secured livelihood of
micro entrepreneurs. Based on its experience, ASA has found that technical assistance for
enterprise development is critical when working with the very poor people.

Federation & Networking

The federation and networking activity is the core microfinance plus activity of ASA, that
helps in achieving the internal vision of creating a program owned and managed by
women. ASA promotes leaders at every level of the program and the parallel federation
structure at ASA ensures the synergy of the program. This helps us not only to carry out
the regular MF programs but also to lobby for large scale issues affecting the social
progress of women.

Rural Education Programs

The promotion of education in rural areas are being carried out by ASA through two of
its programs namely the Child Labor eradication program and the Vidiyal Matriculation
School (VMS).

Eradication of Child Labour

It is an ongoing program since 1997, partnering with the Child Labour Eradication and
their Effective Rehabilitation Scheme (CHEERS) project of the government of
Tamilnadu. Currently ASA runs five special schools covering about 30 villages in
Manapparai Taluk of Tiruchirappalli district. 140 students are being educated in these

46
schools, utilizing the services of 12 teachers and 5 supporting staff. The students are
provided with free education materials, uniforms apart from the monthly stipend INR
100/-. The women belonging to the family are also being supported by ASA-GV’s credit
programs to mitigate the income loss.

Vidiyal Matriculation School (VMS)

Vidiyal Matriculation School (VMS) is a part of ASA’s literacy programs targeting poor
children since 2001. It aims at providing matriculation standard education for the rural
mass at affordable costs. Presently, VMS has 18 teachers and 17 supportive staff working
to educate 340 students through curricular and extra curricular activities.

Table 5.3. Non-financial Services Details

Service Types and Features
5.3.1. Nutrition
ASA provides free noon meals to around 200 people of the general public on all days
through out the year. Food is also provided to members who come to the branch to
collect their sanctioned loan on the loan day. The borrower is always accompanied by
her spouse to borrow the loan. The spouse also receives free meal.
There is two different free meals scheme available at ASA:
a. one is for members (for all the members who come for loan disbursement at the
branches)
b. other one is for non members. ASA does this as service for addressing hunger
among the poor.

5.3.2. Health and Sanitation

ASA provides free eye check up camps to the elderly, and also people who are engaged
in activities like Gem cutting where they are exposed to constant eye strain.

5.3.3. Education
ASA has an English Medium School namely Vidiyal Matriculation located at Kaikatty,
which boasts state of the art infrastructure, IT facilities, Library, play ground, hostel and
offers various extra curricular activities.

5.3.4. Social Capital Development

ASA carried out extensive flood relief and tsunami rehabilitation programs. An example
of one of several relief projects occured during the recent Kumbakonam fire break out
which claimed the lives of more than 10 people

In terms of financial education, ASA has printed 5000 copies of “Centre Diary Volume I
and II” and have distributed to the centers. Each volume contains 100 topics on different
aspects such as education, financial literacy, health care, food security, confidence

47
building and personality development etc. Field offices use the diary to educate our
members on a weekly basis in a structured manner.

5.3.6. Empowerment and confidence building

The following type of activities help to build the confidence of clients: Business
Development Services, CC meetings, Cluster leader meetings and Right based programs,
Education, Training on non – party local elections, International Women’s Day
celebration helps client to build confidence.

Credit products and credit plus activities of ASA Grama Vidiyal build confidence of
clients. A detailed research analysis is conducted for product designing. The newly
launched Business Loan product was introduced after conducting Primary research and
receiving consultative support from professionals and researchers. Some key parameters
for designing the Business loan product were members’ businesses, income level
requirements and present and proposed cash flows.

Members negotiate with Business Loan officers to secure a loan, then prepare business
plans to show how the loan would be utilized. This is done in order to explain how the
loan would increase the cash flow, savings volumes and repayment capacity of the client.

ASA regularly conducts meetings for members and leaders for training and development
programs. During these sessions one of the key agenda is to collect feed back on
products, satisfactory levels, and suggestions on products, services and other operational
policies.
All branches and sampled centers are given In-land letters ad postcards that are addressed
directly to the CMD for sharing their views, comments, concerns and feedback. ASA also
has grievances call attendant at the HO to serve members and staff issues and queries.

In terms clients’ negotiating power in financial and business transactions, when ASA did
impact study, research study on micro enterprise, etc, it was observed that around 20% of
the total members (around 200,000) are doing the business on their own, that is the
women members themselves who conduct the business. Around 40% of the total women
members are taking loan and giving it to their husbands for their business that is the
husbands alone does the business. Remaining 40% of the women families are doing joint
business, both husbands and wives are jointly does the business. In many families around
40-50% the women members take decision or in other words the women involve in
decisions such as education of the girl child, income and expenses management of the
family, cash-flow of the businesses, because the women takes loan and give it to the
family.

In terms of challenges, women members still face challenges related to business

development: lack of mobility for marketing the product, marketing at large markets such
as national level, international level, branding, labelling, etc. The quality expectations and
quality control mechanisms are very much challenging for these kind of microentreprises.

48
Impact on LPG – Liberalization, Privatization and Globalization policies very much
affect the micro enterprises what the poor are doing.

Meeting credit demand of the member community by ASA-GV kind of MFIs would be
the challenge for them. The present products offered by MFIs may not be enough for
meeting their different (credit, others) needs of the members such as housing, businesses,
education, assets, others, etc

Government policies are not very much favourable to the poor and agriculture sector in
India, which leads to poor becomes poor richer becomes richer.

5.3.7. Graduation of very poor clients into mainstream MF/MED services

The business loan product is specially designed for matured clients. The business loan is
offered for the members who have matured with the institution for more than 2 years.
The initial loan size for regular members ranges from 5000 to 15000 INR. However, the
loan size for matured clients, those with the greatest potential to be successful
entrepreneurs ranges from 20000 to 50000 INR.

Since the loan amounts are high, the weekly installments are also high to repay. So the
term of the business loan is set to 2 years. The business loan is not disbursed as a group
loan and it is an individual loan product. In this product the member gives their bank
account details for a credit check and gives two guarantors as security. Out of 200,000
members, ASA has disbursed around 5000 business loans (disbursed with in the period
of six months).Business loan was launched in February 2007.

49
 5.4. Design and Product Development:
5.4.1. Program rationale/ theory of change?

ASA’s MF services are intended to bring about economic empowerment for women
members. ASA’s theory of change is: economic empowerment is the basis for more
holistic development, including social, political and other empowerment. Hence, MF
services provide the foundation and starting point for other empowerment to occur.
However, to make a more holistic empowerment to occur, it is also important to
provide non-financial services and business development services in addition to
financial services. These are reflected in the package of services offered by ASA.

ASA offers a wide range of financial services. Loans are designed to cater to the
demand of the clients and are given solely for income generating purposes. The loan
amounts start from Rs. 5000 and increase up to Rs. 15,000 every year. Members also
benefit from making security deposits while availing the loan. 10% of the loan amount
is held as security at the time of borrowing. The security deposit is refunded at the
time of closure. Members consider this a savings product. Members also benefit from
the Insurance program. Members are encouraged to cover the risk of accidental and
natural death, where the claim sums to Rs. 40,000 and Rs. 20,000 respectively for both
borrower and the spouse.

In addition to financial services, ASA GV offers a wide range of non-financial and

enterprise development services, such as female empowerment campaigns, addressing
topics such as violence against women and training women to participate in the local
Panchayat elections etc.

It is expected that the combination of these services will lead to a holistic

empowerment in all areas of its clients’ lives: economic empowerment is perceived to
be the foundation for social, political and spiritual empowerment.

Also, the other important theory behind ASA’s programs is that sustainable
development can be achieved by empowering the community members, especially the
very poor, to take charge and play active role in decision making both in their
businesses and in their communities. Panchayat election campaign is believed to be
one of the efforts to help women leaders to take active role in the local government,
hence the decision making. Promoting women members to center leaders, community
field officer and gradually to branch manager positions is believed to give real
empowerment to them and allow them to develop more leadership skills.

5.4.1.1. Main issues and challenges of very poor clients which the organization seeks
to address

When identifying members into the microfinance program, members lack the technical
know how of starting a new business. Members do not have sufficient experience and
information to find suppliers and buyers for their products. They do not know how to

50
 financially manage their businesses. They do not know how to market their products
in the competitive environment.

To address the above issues, ASA GV has launched business development services,
marketing linkages, branding and labeling, information sharing workshops among
same trade entrepreneurs, skill development training that share best practices among
various groups. Each branch identifies some major enterprises in their branch and
based on the needs from the entrepreneurs. Not all the trades require this service. As
mentioned above, ASA conduct center leaders meeting every month organizing
around 100-200 leaders. ASA uses this platform to organize entrepreneurs meeting
separately (any of the month in a year based on the needs) to do this service. The cost
is covered from income of the microfinance program (some part) and some part from
donors.

ASA GV also discovered that people find it difficult to prosper because of poor
dwellings. Poor sanitation leads to malnutrition, increasing vulnerability to unforeseen
weather and contagious diseases. This resulted in designing the housing repair loans.

5.4.1.2. Intended outcomes and impacts

The Activists for Social Alternatives (ASA) was established with a vision of creating a
“value based, poverty free, productive, prosperous, human and sustainable community”.
These are the long term impacts ASA envisions to achieve.

In the medium term, matured members are expected to access mainstream financing for
the purpose of housing, business loan, education, etc. Every family should have insurance
for whole family (health, life, non life, assets, etc)

In the short run, ASA intends to help all the members to have at least one business (newly
promoted) or expand their present businesses. Also, creation of assets out of the surplus
income generated after using the loan.

5.4.1.3. How are products and inputs designed to achieve those intended impacts?

General loan products start from Rs. 5000 and increases every year to a maximum of Rs.
15,000. This enables them to increase the business every year. Members are given
training on business development and market linkages on request. After they graduate
they are given business loans with higher loan amounts to become entrepreneurs.

The members are given seed capital to start up their own enterprises. Members are also
given business development advisory services which solve financial crunches in starting
up livelihoods. Additional loans are given to meet their short term requirements so it
would not affect their regular incomes or cash flow. The additional loans are utilized for
their children’s school fees, medical expenses, marriage expenses etc. The loan and
collection activity is done within their group which gives them the assurance that they are
capable in meeting their financial needs when they are in a group. The group guarantee

51
stays strong at the time of repayment. In the long term, members are empowered
economically and socially, serving as models for the rest of the community.

5.4.2. Concept development

5.4.2.2. Competition analysis

ASA Grama Vidiyal operates in both competitive and non competitive markets. Most
of the areas are becoming competitive after many MFIs and government programs
have started. ASA Grama Vidiyal’s program is a unique Grameen model of
microfinance. The other MFIs follow different lending practices. Grama Vidiyal’s
keys to success are its easy access to money and recovery practices and
friendly/personable staff.

In some areas there exists an overlap between Grama Vidiyal and other MFIs. A
woman might be a member of more than one micro finance program and Grama
Vidiyal aims to eliminate such members.

It is indeed difficult sometimes if members join other groups after joining Grama
Vidiyal. Through feed back from clients and branch staff, members in multiple
programs try to stay with Grama Vidiyal.

ASA conducts an analysis in each branch district/village. One component of the survey
tool is to analyze competitions. A model survey form is enclosed herewith for your
reference (see attached).

Changes that are made using the competition analysis include:

• Increased 1st loan size from Rs. 3000 to Rs. 5000 and then to Rs. 7000.
• The maximum loan size from Rs. 10000 to Rs. 15000
• The business loan product is introduced with the loan size of Rs. 25000 to Rs.
50000
• The loan term is changed from only one year to two years as well.
• The Special loan of Rs. 1000 is introcued exclusively for the poor.
• The loan term for special loan is varying from 10 weeks to 20 weeks. Earlier it
was only 20 weeks loan of Rs. 2000.

5.4.2.3. Self-assessment

ASA conducts monthly feed back from field officers and branch managers through the
monthly branch review meetings. The information is gathered by the Divisional Manager
and Divisional Directors and is shared with the CEO and COO. Information pertaining to
products, performance, MIS and human resources are discussed. The branch review
meetings are conducted during the first week of every month. The branch staff,

52
Divisional Managers and Divisional Directors are the convenors of the review. Review
sharing helps to foster changes in policies, products, systems, and staff salaries.

BRM meetings:
During the branch review meetings held every month for the entire branch staff at HO,
the program level findings are assessed and the same is reported the management team.
Based on the program level findings, the policies are re-designed or developed and
circulated to the branches. These findings are more of the operational policies, system
and procedures of branch, divisional and zone office functioning.

Staff Feedback:
During all staff meeting and branch review meetings, the staff gives feedback,
grievances, requests, etc to the management. Based on these findings, the HR policies are
developed and updated on a periodical basis, at least once in 6 months.

Members Feedback:
As explained earlier, based on the members feedback through inland letters, suggestion
box, feedback from centre leaders meeting, cluster meeting and federation meeting, the
products and services are re designed and implemented. This is also on a periodical basis
at least once in a year.

Apart from review meetings, each branch has a suggestion box installed where members
can drop a letter to the head office for suggestions and complaints on services offered.
And every year, women’s day is celebrated all across the operational areas. Members get
an opportunity to speak to mass crowds about their experiences, suggestions and feed
back for the institution.

The following are examples of actions and product modification made as a result of
comments made by the members through the suggestion box:
 Varied loan term
 Varied loan size
 Increased 1st loan size
 Increased maximum loan size
 Longer term loans for business
 Removed the security deposits for special loans (SD is the security fund collected
from the members – 10% of loan amount)

Also, monthly CC meetings give detailed feedback on issues in the micro finance
program.

5.4.3. Product / Service design

5.4.3.1. Product/service design process

It is the vision, mission of the organization to serve the very poor clients.

53
ASA started with the objectives of serving poor and dalit in Tamilnadu. The very poor
people are the only group of community don’t have options for financial support (except
money lenders who are charging exorbitant interest rate). ASA believes the very poor
people are credit worthy and bankable

ASA Grama Vidiyal products were designed purely on needs assessment surveys done at
the very early stages. The organisation’s objective is to serve the poorest of the poor
people and so the target clients were determined and the products were designed
appropriately. First members would start with savings and then would apply for loans.
The first loan would be from Rs. 1000 to Rs. 5000/- repayable in 50 weeks.

Our business loans were designed after conducting elaborate surveys of mature clients
who were more than 3 years in the program. Centres were interviewed at rural, semi
urban and urban branches. Members’ needs were assessed and the business loan was
launched.

5.4.3.2. New versus modified products/services for very poor clients

As explained the special loan of rupees 1000 to 2000 helps the very poor community.
This loan is offered for consumption purpose. The very poor members get this loan use
for purchase of food materials, dresses, pay education fees for their children, etc.
From their wages they could easily pay back the same. The cost will be higher for ASA-
GV. But for taking care of the very poor category, the loan product is offered.

The Multipurpose loan was introduced two years ago. ASA realized that members were
in need of money for consumption purposes and for unavoidable circumstances. At such
times members end up borrowing from local money lenders at usurious rates. The multi
purpose loan was introduced purely for consumption purposes such as paying children
educational fee, marriage expenses, festival expenses etc. The multi purpose loans are
given as additional loans to members after their 2nd year in the program. Members can
borrow from Rs. 1000 to Rs. 2000/- as the multi purpose loan.

5.4.3.2. Risk assessment and product design

Members lack skills of absorbing some of the training methods. For instance, some
members may find it too technically difficult to understand some of the business
processes, know how, technical terms etc. Members vary greatly in their skills and
experience in running microenterprises. As a result, designing products and training
methods for different levels of client capacity, all for the same loan amount, can be
difficult.

There are risks and challenges that very poor clients experience compared to better off
clients. For example, the very poor clients are more prone to illness, hence they are not
able to go for job and earn out of it. One biggest challenge for them is that, if they go for
job then only they can earn. So their future is very much unexpected. Their life is not

54
secured in that case. The better off members will be supported by the family income,
business income, etc and they will be taken care of by other family members.

5.4.3.1. Prototype development and testing

The products were designed with help from various researchers such as Gaamaa
Hishigsuren, Helzi Noponen, etc,. and other senior members of the organisation. They
also incorporated lessons learned from visiting other organisations and learning other
MFIs experiences as well as participating in various workshops. Recently, the Business
Loan was developed after doing primary research with our matured clients. Senior
members also utilized information from workshops attended in Turin on product
development, product development workshop conducted by GFUSA and research papers
from WWB.

For all the departments, zones, divisions and branches, independent goals and objectives
have been designed and developed, which will assess the performance in the year end of
each department, branches as well as the individuals. Based on the performance appraisal
by the management team, the salary and incentive package would be designed. This is the
newly developed methodology in ASA-GV for improving performances.

5.4.4. Pilot testing

The products are pilot tested in the senior branches. There are 54 senior branches (out of
total 74 as of August 2007). The senior branches have matured members who
understand the program very well. The products are tested in 1 branch and one or two
centres. During pilot test of business loans it was ensured that the business loan product
was merely a pilot test and that the product would be launched only after successful
feedback.

It was found from feedback that collecting cheque slips as security collateral was not
reliable for the poor. Also, the business loan is offered after three years, which is found to
be too long. After ASA received this feedback, changes were made to the loan policy:
currently, collecting cheque slips as security is stopped and business loans are offered for
two year members.

5.4.5. Rollout

For instance, the business loan was pilot tested in one senior branch. The test was proven
successful and is now offered at all the senior branches. During the pilot test phase, we
observed various documentation issues, such as member opening accounts with other
banks, obtaining guarantors and their details etc. After observing a number of these
experiences, the documentation process were streamlined and made much easier. For
example, filling up of assessment form was felt difficult by the business loan managers.
The consecutive training has been given for them to properly prepare the documents.
There has been no issue during the full-fledging or roll out.

55
5.4.5. Product/Service review and assessment

ASA GV collects feed back from the members in the following ways:

- Suggestion boxes where the member themselves can write letters to the head office,
- CC Meeting where the member leaders give feedback to the senior staff in the
organization,
- Monthly Branch Review Meetings conducted by the Divisional Directors and Managers
where both member and staff feedback is obtained,
- Staff meetings where the all the staff members of the microfinance program are
involved in group discussions on various topics.

Moreover, special survey exclusively for business loan is conducted for designing the
product as well as for the feedback. Because the business loan members only can give
their views and feedback related to business loans compared to the general members.

5.4.6. The Product Development Cost

5.4.6.1. Total cost

The product development costs include the salaries paid to the professionals of the
research and development team as well as training costs and stationery costs. The exact
costing of the product development is not available.

5.4.6.2. How were they funded?

Usually the income from the MF program is utilised. In few cases, results of research
carried out with donor funding are used for product modifications.

Some parts of trainings are conducted from grants and the remaining is from income from
MF operations only.

5.4.6.3. Outsourcing during the development process

In most cases, ASA does not outsource the development process. Only in few instances,
ASA hired interns during the project development phase to collect data. Also, some
industry experts are invited to provide consultation during the design.

5.4.7. Feedback loop

ASA has an effective feedback loop where information need is identified, obtained from
members, analyzed and presented to the management to be used in decision making. In
some cases, a follow up research or data gathering is taken to collect more detailed and
systematic information before making a final decision.

56
ASA has effectively used the information gathered through the feedback system to make
product modifications and/or develop new products.

The attached Progress Note on ASA provides detailed information on ASA’s client
assessment system.

5.5. Implementation Process

5.5.1. Process

Before starting a new branch, an experienced manager from an old branch along with other
staff members first conducts an extensive survey of the area. See attached a sample survey
of Gandarvakottai block. This involves both primary and secondary research. Various
research methods like household surveys, wealth ranking, PRA are applied for collecting
primary data. Competition from other MFIs is analyzed before spreading operations into new
areas. Based on the results of the survey a decision is taken on whether or not to open a full-
fledged branch in the area. Senior staff from an old branch along with 3-4 junior/new staff
opens a new branch.

Once potential members are identified, Field Officers conduct a Compulsory Group Training
(CGT) for four days at the end of which a Group Recognition Test (GRT) is conducted.

Center training: the field officers are conducting this training to the members when they
join GV. There are four days of training at the village itself. The topics include,
introduction about the organization, products and services that ASA and GV offers,
(savings, loan and insurance and other development program) center leaders roles and
responsibilities, loan proposal making, group formation procedures, loan utilization
checking (end use verification), interest rate, etc are explained in the training.
Everyday the review of the previous day is done. For each day, the members pay Rs. 1
per day towards training fees

Group training: The branch manager or accountant (second person of the branch) does
this group training at the village in the presence of FO and the members. The BM visits
the houses for housing index verification and interacts with the family members about
their understanding. He assesses the poverty level of the members as well. He asks many
questions about the program to check how far the training reached them and how far they
understood the program. If he is satisfied, he approves the group to join into the program.
The members pay admission fees on that day, sign on the member admission form and
join the program.

Subject to passing this test successfully, groups are organized according to the Grameen
model. After four weeks of regular meeting and saving activities, the first external loan is
extended to the groups. Until two years ago, all Field Officers used to visit a group four
times in a month. However, now the organization has empowered some centre leaders to
function as Community Field Managers (CFM) in senior branches. CFMs function as field

57
officers every alternate week. This has enabled the some of the staff to double their
productivity.

Center meeting: 20 members form the center, whom are sitting in round shape by group
wise and conduct the meeting. Meeting is held every week at the same place, same time,
same day every week. The field officer and the center leader conduct the meeting. All the
members should attend the meeting without fail every week. The field officer records the
entries, maintain all the books and accounts at the field level and the center leader do
collect the dues from the members consolidate, prepare denomination, etc. Center
meeting starts with member awareness song, member pledge and then the staff pledge.
The staff takes the attendance and makes entries of collections from members by group (5
members) wise.

Loan disbursement: loan disbursement takes place at the branch office. The member and
their husbands come to the branch on the loan disbursement day. The other five members
signs in the loan application as guarantors. The group and the center decides the loan
size.

5.5.2. Logistics

The design of ASAs MF program itself takes care of very poor clients. For example,
during survey itself, the very poor segments are identified. When forming group itself the
very poor also are covered. The loan size varied from Rs 1000 to Rs 7000 as first loan.
The very poor category will have Rs.1000 to 3000 loan size and the other group may go
for Rs. 5000 to Rs 7000 loan size. The village has every range of poor segments such as
very poor, poor and moderate and covering them will be regular one and not any special
attention to be given exclusively for the very poor community.

In relation to village size, small village will have lesser groups and the larger one will
have 4 to 5 centers of 20 members. Absorption capacity varies by these groups. Rural
centers have lesser absorption and semi urban, urban centers have larger absorption
capacity. Each branch has mixture of semi urban, rural centers with very poor members
and moderate as well. This structure balances the viability of the branch. No branch has
only very poor or moderate group within the operational area.

Likewise cost is actually center sharing basis. Some senior centers with high outstanding
and moderate poor with high absorption capacity substitute its income for the junior
center / less outstanding centers / center with very poor women.

5.5.3. Information System

ASA has a streamlined information system for monitoring and managing performance. The
following diagram illustrates the information collection, consolidation, analysis and use.

58
 Centre Level Branch Level HO Level

Centre Field Officer Accountant Division

Original Copy of Other Financial

Duplicate Copy of
Collection HO Department
Collection Transactions
Format
Voucher
Member wise Original Copy of
Collection MIS Department
Individual
Pass Book Voucher

Attendance Consolidated
Register Reports
/ Minutes Note
MD
All Branches

Data All
Departments
Base Funding
Agencies

6. Results

6.1. Method of measuring results

Assessing the growth and development of ASA’s members across economic, political and
social parameters is very important, in order to understand the progress of ASA-GV in
achieving its vision and mission. The impact assessment programs are intended to study
the influence of ASA-GV’s development efforts on its target communities. ASA
implements three such impact assessment programs and they are:

Member database

As explained above, ASA maintains a database on each member from the entry through
repeated participation in the program. This is referred to member database. It provides
basic information on members’ profile, including socio-economic conditions, housing,
income and location. This is used to conduct a simple monitoring of changes that occur in
the lives of members over time.

Practitioner Learning Program (PLP)

Under PLP, the AIMS tools (Assessing the Impact of Micro-enterprise Service) were
used to collect data from a randomly selected sample of members of ASA-GV’s
microfinance program. The PLP was implemented in ASA-GV by Dr. Gaamaa
Hishigsuren as a consultant. The focal area of the program was to bring out quantitative

59
as well as qualitative results on five specific areas viz. empowerment, clientele
satisfaction, utilisation of loans and savings, impact and exit survey.
ASA-GV had implemented the PLP for the first time in 2002-2003 to study the
qualitative impact on a couple of domains, namely empowerment of women and clientele
satisfaction. The outcomes were encouraging as the members had attained significant
progress in terms social, political and cultural perspectives. The exit surveys clearly
indicated migration of the members as the primary reason for clientele drop outs. Under
this initiative, ASA had introduced suggestion box and satisfaction express systems to get
the feed back directly from the end-users. This helps in shaping the programs to suit to
the needs and demands of the community.

Internal Learning System (ILS)

Internal Learning System (ILS) is an innovative impact assessment design formulated to
suit the beneficiaries of ASA’s development programs, especially the illiterate. The
down-to-earth pictorial diaries used as the tool to collect information from members were
very effective to execute the study in a participatory manner. The pictures in the diaries
represent empowerment indicators such as living conditions, economic and socio-
political progress etc. The members can keep a record of their growth with the program
over a specific period. This provides qualitative change in the lives of the people. See
attached report.

6.1.1. Type of data

For impact, ASA tracks member profiles through regular data collection from all
members every time they renew their loans (referred to as member database). Also, ASA
used Internal Learning System to monitor impact. More info on the ILS is in next section.

On financial performance, see attached monthly statement and financial statement.

6.1.2. Data analysis and use

ASA collects outreach and portfolio data on a weekly and monthly basis.

On a weekly basis:
• Centre fund
• Pass book
• New members
• Drop outs
• Loan disbursement

On a monthly basis:
• Branch portfolio (Loan disbursement, Loan recovery – type wise, member wise)
• Income & Expenditure

60
 • Budget approvals

Quarterly analyses are done for branch viability. And for the organization, ASA prepares
a monthly un-audited financial statement.

6.2. Impact

6.2.1. Poverty Impact

The first systematic impact assessment was conducted in 2000 by an independent

consultant, Gaamaa Hishigsuren. A total of 350 clients were selected from six villages:
Kovilpatty, Kallupatty, Manikandam, Viralimalai, Keeranoor and Annavassal, for
empowerment interviews and focus group discussions. The attendance rate was 72%
(percentage of those invited who actually gave interviews and participated in the focus
group discussions). The sample was drawn using stratified random sampling method. The
number of loans and the branch locations were used as sample categories. It was assumed
that the level of empowerment might differ according to the number of years of
participation in the program. The number of loans was used as a proxy for the length of
participation in the program, since average loan term is one year.

The following is the summary of findings.16

 Improved Self-confidence: Significant empowerment was reported in terms of

greater confidence and ability to plan for their future (90%)), increased mobility
(67.5%) and improved personal appearance (90%). As a result of compulsory saving,
all of the members had saved a significant amount, which provided them with greater
economic security and self-confidence. On average, the respondents had compulsory
savings of Rs.1140. In addition, 25% of them had voluntary savings.

 Increased participation in Decision-making: The respondents indicated significant

change in terms of decision-making as a result of increased income and improved
self-confidence. Before joining GV program 77.5% of the respondents did not
participate in decisions affecting their lives. At the time of interview, 65% of them
made decisions on their own and 25% consulted with their family members.
Examples of decisions included use of loan proceeds and purchase of dresses and
jewels for themselves; groceries and household items; and raw material for their
income generation activities. Another important aspect in decision-making involves
women’s ability to handle money in the household. 82.5% of the members said that
before they got loans from GV program, husbands were the only ones who brought
earnings to the family and thus, made all the decisions dealing with money. However,
after getting GV loans, 70% of respondents decided how to allocate the household
earnings either on their own or in consultation with their husbands. Furthermore, they
16
Hishigsuren (2000). Practitioner-led impact assessment of ASA as holistic
approach to development.

61
 were enabled to make independent voting decisions, participate in village meetings
and approach village leaders when there was a conflict.

 Household empowerment: The women have dreams for their own future, their
household prosperity, sending children to school, constructing a new house or
expanding the existing house, and purchasing a vehicle or livestock. After getting
GV loans, all the respondents, except one member, increased their income, 80%
started new income generating activities and the remaining 17.5% expanded their
existing economic activities. Increased income and economic security resulted in
increased nutritional intake, access to better healthcare services and improved
housing conditions. 95% of the interviewees reported increased food intake, while
57% said that they had even secured their own source of food, by purchasing
livestock for meat and milk supply, land to grow rice, vegetables and fruit. 69% of the
respondents had purchased additional assets and/or improved their electric or water
facilities. Improvement in housing condition was reported more significantly by those
who had participated in the program for more than two years (72%). There was not
much change reported in terms of role transformation: 52.5% of the respondents were
categorized as exceptions (single or widow), and 63% of the remaining started to
receive some help from their family members. Moreover, not a significant change
was reported in terms of job creation. Also, a significant number of the respondents
indicated that they still value the traditional role of men and women in the
housework. Therefore, they believed it was not necessary to change the traditional
role they played in their families.

 Community empowerment: Through weekly center meetings and network

federations, the program encourages the women to become active members of the
community and to participate in decisions regarding socio-economic and political
issues that affect their lives. In addition to enabling them to have more control over
the resources in the community, the program activities contribute to women’s
increased awareness, improved self-esteem and leadership qualities. Among the
members who had been in the program for more than 5 years, 85.7% had actively
participated in meetings organized outside of ASA program activities, as opposed to
12.5% of the new members. Not only do the members increasingly participate in
public meetings and activities, but also they are leading and organizing their
communities to address both infrastructure and social issues (57.5%), as illustrated by
examples in the analysis section. Furthermore, ASA had brought together community
members from different castes and enabled them to reduce caste discrimination in
their communities. 94% of the respondents, who were not able to talk to members of
other castes at the beginning of the program, sat together and talked with other
community members without regard to caste.

Secondly, ASA implemented Internal Learning System. ILS is essentially a socio-

economic questionnaire in pictorial format that respondents have been facilitated to ask
and answer themselves.17 It was a three-year panel study of a random sample of its
17
Noponen (2004). Impact study report.

62
participants who will be tracked for impact assessment purposes over a three year period.
This report details findings from the analysis of data from two time points for the same
panel of randomly sampled ASA participants.

For the domain of “livelihoods base”, there were a number of significant changes over
the period. The most striking was a change in the household livelihood portfolio marked
by a decrease in the total number of income sources overall caused by a fall in the
number of male and joint income sources.

While the number of female income sources remained the same, the percentage of
women who provided the largest income flow to the household increased significantly.
There was a similar increase in the number of women who bore the responsibility for
paying for the largest expenditure category in the household.

Over the period the reliance of households on wage work declined as enterprise work,
agriculture and livestock rearing rose in importance as the largest income flow in the
household livelihood portfolio. This result was reflected in the significant increase in
ownership of livelihood assets such as livestock, productive equipment and land assets
over the period. Participants have also engaged to a greater extent in good land and
animal husbandry practices. These changes in household livelihood base were associated
with changes in the “savings and debt” positions.

There were significant changes in the patterns of utilization of the microfinance loan by
women participants. There was an increase in use of loan for women's productive
increased the level of public mobility by making visits to important government
institutions of panchayat, block and district collectors’ office.

The strengthened economic role of women in the household economy and their enhanced
decision-making role in enterprise and household matters were associated with positive
results in the “consumption” domain. Housing and living conditions have improved
noted by shifts to superior types of housing units and increased access to electricity and
gas cooking fuel. There was increase in women's satisfaction with their ability to eat a
nutritious diet and obtain access to health care. School attendance for children increased
over the period for both boys and girls, although the gender equity gap of a greater
percentage of school-age boys attending school compared with girls widened slightly.
The incidence of child labor decreased for both boys and girls, but to a greater extent for
girls.

The final domain of “program participation” showed positive results in terms of

decreased level of credit discipline problems and stress. There were fewer numbers of
women experiencing missed loan repayments, need for group help in repayment, use of a
money lender loan in repayment, or suffering of deprivation in order to repay the
microfinance loan. Satisfaction with aspects of the loan program also increased. The
participants gave higher scores for loan size, timeliness and interest rate since the
baseline period. The participants also rated their own role in the SHG more highly in
terms of improved satisfaction in attendance and punctuality and participation. They also

63
rated satisfaction with the functioning of their SHG more highly for making fair
decisions, meeting loan needs, and helping in repayment. Participants also gave higher
scores to ASA field staff in their approachability and assistance in improving center
functioning. There was no change in satisfaction with ASA help in credit-plus issues.

6.2.2. Client satisfaction and feedback

ASA regularly conducts client satisfaction both informally and formally. As an example,
the study conducted in 2000 by Hishigsuren discussed the following elements and found
the result as reported below:

 Loan: First loan size and maximum loan size

 Amount of compulsory savings
 Member insurance schemes
 Marketing linkage: internal linkage and vidiyal shandi (local market)
 Network federation: addressing issues and participating in local governance

Overall, the majority of the members participated were satisfied with the current policies.
In particular, 96.6% of the respondents liked the network federations addressing both
social and infrastructure issues. In terms of loan products, 83.4% of the respondents were
satisfied with the current first loan size of Rs.3000.

However, differences emerged according to the length of participation in the program.

For instance, while 73% of the respondents with 1-2 loans preferred the current
maximum loan size of Rs. 10,000, the majority of the older members tended to request
bigger loans (Rs. 20,000) than were offered at the time. Another attribute for differing
opinions was the type of microenterprise activities the participant carried out. For
instance, those who were engaged in gem-cutting and petty shop needed smaller amounts
of working capital, while those who were engaged in wholesale of ready-made dresses,
lease of coconut trees and brokerage of milk animals required larger loans, often for
investment purposes (purchase of new machines, equipments and land). No significant
difference was found across geographical locations. The branches are identical in the
provision of services and the villages are of a similar economic nature and in the same
distance to the district center.

The focus group discussions provided invaluable information for not only improving the
existing products and services, but also for introducing new services. For instance, the
participants strongly suggested the creation of Vidiyal Shandi (local market) for GV
members and provision of insurance for their family members.

In addition, the clients were asked if they had other concerns and issues. Many members
wanted to talk about their stories: what changes happened to them since they became GV
members and how those changes influenced the way they led their lives as a member of a
household and a community. Their suggestions helped to identify impact indicators that

64
could be used in constructing an impact survey questionnaire and measurements for in
the second round of assessment.
In addition, the study conducted in 2004 found that the members who joined ASA after
2001 reported higher satisfaction than the members who joined before 2001.
Survey responses on quality of services
Pre-2001 Post 2001
Good to Excellent 3 years ago Currently Currently p-value
Quality of member
service 81.4% 75.4% 89.8% 0.00
Variety of services and
products 71.9% 83.3% 93.8% 0.04
Overall satisfaction 78.6% 84.9% 83.8% 0.08

In addition, the study conducted a survey with exit clients (former members) –
total of 180 former members were interviewed. As Table below demonstrates, majority of
former members, both before and after the scaling up, decided themselves to leave. None
of the post-2001 former members was expelled by ASA management, while only 1.2% of
pre-2001 former members left because ASA expelled them. This is the same when each
branch is analyzed separately.

Table: Decision to leave the program

Pre200
1 Post2001 p-value
Member herself 86.9% 84.2% 0.71
Member's family 10.7% 14.5% 0.71
Member's group 1.2% 1.3% 0.71
ASA 1.2% 0.0% 0.71

There was no significant difference in terms of the most important reasons for
pre-2001 and post-2001 members to leave. The most significant, single important reason
for pre-2001 members to leave was reason outside of the program and her business
(34.5%) while for the post-2001 members, the most important reason was problems
related to their businesses (42.3%).

In addition, the data from ILS reports some findings on client satisfaction (see
above).

Furthermore, herewith enclosed three case studies.

6.3. Cost Effectiveness and Sustainability

6.3.1. Scale and replicability

65
 6.3.1.1. Strategy for scale?

Grameen model of microfinance can be replicated any where in India.

ASA’s current expansion strategy would be geographical approach: spreading in the

neighboring states.

ASA first sets up the divisional office at the district head quarters and then the
divisional manager, branch manger of the respective new branch with survey team do
the survey, identify the location of the branch and start operations.

Branches are set up surrounding district head quarters.

x branch

A branch y branch

district
headquarters

B branch z branch

C branch

Promoting new zones (20-30 branches), new divisions (6-10 branches) and branches
in the expansion area would help us to promote new members. Do the survey in all the
new areas we are planning would be the first step to identify the proper location to set
up the branch. Senior staff team forms this survey team and they do the survey in the
newer areas. The primary data is collected from government offices such as collector
office, revenue offices, municipal offices, office of social development of each states,
etc for population status, literacy status, GDP data, caste break up, list of hamlets,
villages and the panchayats.

Secondly the team visits all the villages in the area and collect secondary data using
the survey format.

6.3.1.2. Replicability of program or service

The same as above.

6.3.2. Financial and operational self-sufficiency (if applicable

66
ASA strives to achieve sustainability both in terms of institutional capacity and ability to
cover its costs from internally generated revenue. As of 2005, ASA achieved 100%
operational self sufficiency and 95% financial self sufficiency.

Below are some key financial ratios as of March 2007.

Mar-07
6.3.2.1. Financial expense ratio 10.35%
6.3.2.1. Operational expense ratio 17.7%
6.3.2.1. Cost per client 489
6.3.2.1. Clients per staff member 530
6.3.2.1. Average loan balance per borrower 4,426
6.3.2.1. Average savings balance per saver See sections earlier
6.3.2.1. Portfolio at risk 0.30%
6.3.2.1. Tailoring of product/service GL, BL,SL HL

6.3.3. Cost-effectiveness of non-financial services?

Microfinance and non-financial services are managed and implemented by two teams.
Financial services strive for full self sufficiency (or cost recovery), while non-financial
services continue to receive subsidies.

ASA-GV has been collecting Rs.1 per member per week as the membership subscription,
which will be used for meeting the cost (travel, food, lodging etc.) for the delivery of non
financial services that include the training programs, consultation services, experience
sharing campaigns etc. Some of the training programs are being sponsored by the GV by
meeting the cost from its operational income from the MF program. ASA for its part
provides training programs and other non-financial services utilising the financial
resources mobilised from domestic and international donor organisations in the form of
grants.

6.3.4. Strategies to cover/reduce costs?

ASA-GV has the following strategies to reduce the cost:

1. Case load per FO is 500 at present, compare to previous years. increase in

caseload reduces number of FO in turn reduces cost

2. Implementation of community field officers, which is again replacing the field

officer reduces cost to the program. For example the field officer visits the centers
in the first week and in the next week, the center leader conduct the meeting and
come to the branch to settle the collections. In this way the number of meeting
attended by field officers reduces 50%.

67
3. Software reduces books, records and paper work.

4. Other product delivery such as insurance scheme, cross subsidise the mf

operations. The insurance company pay back some admin cost to the institution
from the premium paid. Around 30 – 35% of the premium is paid as commission

68