Further analysis has led to the realisation that - 

1. Providing inputs to an individual family is not sufficient to raise the family above the poverty line and to keep it there; it is possible to lift the family above the poverty line for a while but it requires support to remain there; this support is part of the backward and forward linkages as well as the basis of the environment of social security and mutual assistance which the poor family requires in order to take risks and launch out into new fields. The groups effectively meet these requirements.

2. Provision of inputs directly to individuals often results in a higher opportunity cost to the individual; in other words the cost of maintaining the new input is often higher than the cost incurred previously. This is because the family opted for an input because it knew MYRADA would provide it. The group on the other creates an environment in which the family will not ask for a resource that cannot be maintained because the other members will refuse the credit knowing fully wellthat it is not viable. 

3. Provision of inputs directly creates a relationship of debtor-creditor between MYRADA and the individual. This is an unhealthy relationship and undermines all MYRADA's efforts for community organisation and motivation. Further, MYRADA's image of a lender is soft, since it is seen as an organisation that is sympathetic towards the poor.

4. The general culture of recovery is poor and the people do not feel responsible to return funds to banks, cooperatives or even to MYRADA. 
   
   Further, the cost of repayment is high - the few debtors who feel responsible to return funds have to often travel 5 - 10 kms. to repay the banks and cooperatives whatever small amount they can, often at the cost of a day's work. This acts as a disincentive for prompt repayment. On the other hand the lending operation of groups does not create a debtor-creditor relationship. Being a member of the group a loanee is simultaneously a debtor and a creditor. He/she hence feels responsible to repay back on time. The group being right at his/her doorstep, a loanee can return funds without incurring costs. The group can and does apply pressure on the few members who do not repay back promptly. 

5. Some of the needs of poor families cannot be met by giving inputs for the economic development of individual families; eg. drinking water, access to health services, roads and transport, etc. As in India we operate with scarce resources, the poor people have to get together and lobby with the Government to mobilise this infrastructure. Further, some of these assets have to necessarily be managed collectively - by all the people in the village. The small groups in each village come together to lobby for the management of these assets and services.

6. Educating each and every individual family is neither possible nor sufficient to bring appropriate changes in the values and attitudes of the family. For eg. changes in attitudes towards women, scheduled castes, other religious groups etc. The social values of families are largely shaped by the values of the people with whom they live and interact. Hence, it is imperative that we work with all these people collectively if we want to bring about changes in the values and attitudes of individual families.

7. Groups foster the emergence of innovative, appropriate and replicable ideas by providing the people opportunities to come together, share and learn form each other's experiences. This is not possible in an individual approach. h> Groups throw up new leadership in the village. These emerging leaders who have the support of the group are chiefly from the economically weaker sections, unlike the traditional leaders who belong to the upper caste and class. This is reflected in the fact that people in the village have already started looking up to the group rather than the traditional leaders to help them solve their problems.

8. The group approach has brought to the surface many operative latent traditional values like group support, thrift, group action. These values existed and were operational within caste groups. This society is now breaking up or has broken up and the values have become latent. However, once a group begins to function as our groups do, which have been formed on the basis of social functionality, these latent values become activated. This is proved by several decisions taken by the groups which affect their behavioural pattern.

Since then MYRADA has been actively encouraging the formation of small groups of families with similar needs and interests and in consultation with the people, studying ways of how their functioning can be further refined and enhanced.

A few of the additional features of these groups now are :

1. All the groups encouraged their members to save. Whether savings have to be made daily, weekly, or monthly and whether or not they have to save a certain minimum and/or uniform units are, however, decisions that differ from group to group.

2. All groups have certain rules that discourage members from making withdrawals before a certain length of time and/or before their balance has reached a certain size. This ensures that the group always has some capital with it, with which to advance loans to members and earn interest for itself. However, there are exceptions to this rule also.

3. All groups have provision to advance loans to members. How much to advance, towhom, under what circumstances, for what purposes, and at what interest rates are decisions taken at the group level and may differ from group to group. Some groups have decided that loans for contingencies such as sickness, funerals, rebuilding a house that has been burned down, etc. will be charged a lower rate of interest than loans for income-generating programmes; some groups agree that loans taken for investment in quick, profit earning ventures can be charged a higher rate of interest; some groups have rules that at present prevent them from making larger advances for purposes such as buying a pair of plough bullocks or sinking an irrigation well; most groups agree that members who do not sincerely attempt to save and who do not take responsibility or participate actively in the affairs of the group will not be advanced loans and may even be asked to leave the group. Some of the most common purposes for which loans are advanced are as follows :

   • Agricultural credit: the advantage of approaching the group for credit is that there is no paper work involved, credit will be available on time and members can negotiate the amounts they require instead of accepting a pre-determined package.

   • Sickness and accidents requiring emergency relief.

   • Social occasions such as marriages and funerals. The above two are the most common causes for people becoming indebted to money lenders.

   • Short-term credit for small business purposes. Left to themselves and free of feasibility studies, many rural people are quick to spot a business opportunity that they feel they can take advantage of. Often, loans (working capital) are required for  quick-return business ventures (eg. trading in seasonal flowers and fruits) that can be paid back within the space of a few weeks. If this money is not available, it is a good opportunity lost.

   • Small loans to be invested in income-generating programmes. While a farmer may be eligible for a loan package that can buy him 20 sheep, what he may want and can manage is only 2 sheep. A credit group understands such priorities much better than a bank can. 

   • Credit for educational and travel purposes. Though not a very high priority need, some families have ambitions that can be met through the credit group.

4. All groups have strategies for making recoveries. These strategies may differ from group to group. Some have agreed that one set of members must fully repay their loans before the next set of members can be advanced; some groups agree that if repayments, however small the instalments, begin to be made from the very next week of a member having taken a loan, then the rate of interest charged will be nominal, otherwise it will be compounded with each week that passes without repayments. Whatever the mechanism, the strategy is to keep up group pressure on members to repay.

5. All the groups have the flexibility to help members cope with crises that can threaten to affect repayments. Some groups have a system of insurance to cover crises; others re-negotiate the time frame for repayment and the rate of interest payable; others accept repayment in one form or other than what was initially agreed upon.

6. All groups are engaged in or thinking of, certain group income-generating activities to expand their resource base while meeting some community needs. Some deal in seeds and fertilisers, others may own and rent a breeding bull, ram or boar, others have community fodder plots or feed- mix plants, some own and rent out agricultural implements, some have forest nurseries, and so on.

7. All groups emphasise - in addition to individual savings - the development of a common fund through which crisis situations can be met, community development activities taken up etc. Contributions to this common fund can come from interest on loans and savings, income from group income-generating programmes, fines collected from members for certain lapses, donations, and in some cases weekly/ monthly contributions made by members in addition to savings.

Upon request from these groups, the resources mobilised by them may be matched with some funds from MYRADA. MYRADA has recently been successful in interesting the National Bank for Agricultural and Rural Development (NABARD) and CAPART to make a contribution to support these groups as well as study their efficiency as an alternate credit mechanism for rural areas.  

With the formation of these groups the focus of MYRADA has expanded to include not only credit delivery but also the management of resources by the poor.  

These groups are not just part of another MYRADA programme. Neither are they channels through which MYRADA delivers development programmes. They have features of a movement and mark the shift in focus from delivering development programmes through "extension services" (which implies that `we' know and `they' don't) to building up of groups with appropriate structural features, skills, attitudes and resources to sustain a process of development that the poor can understand and control.

  This strategy fits in well with MYRADA's policy of withdrawal. It is to equip ourselves as well as others in the field including the people themselves, with appropriate skills and attitudes that the Development Professional's Training Programme(DPTP) towards Management for Change has been designed and carried out.

NOTE :

The Credit Management Groups are only one of the several rural institutions that have developed to manage resources. There are other groups that manage common resources such as seed banks, drinking water management committees, watershed associations, etc. without managing credit. Milk Societies are another good example. But these groups are structurally and operationally different from the Credit Management Groups, and meet a different kind of need. The milk societies, for example, include all classes and are neither socio-economically homogeneous nor small. Yet they are viable because they are based on the value of the product handled, which is the same for the rich and the poor, and there is an established system to assess the value of the product.

Footnotes :

1. The experiment with NABARD and the subsequent RBI guidelines led to a pilot project on linking self-help groups with banks. This has now progressed beyond the pilot phase and is a programme that is operational throughout the country.

2. The Development Professionals' Training Programme (DPTP) referred to above is an in-house training programme of MYRADA to enhance the knowledge, skills, and capabilities of MYRADA Staff not only to respond with greater sensitivity to field issues but to also communicate our learnings to others who share our concern for rural development.