Credit Assessment - the ASSEFA Way

The Association of Sarva Seva Farms (ASSEFA) was founded in 1969 as an agency to provide guidance and assistance to allottees of land under the Bhoodan Movement or "land-gift" movement launched by Vinobha Bhave, a disciple of Mahatma Gandhi for raising agricultural production on the newly allotted lands. Since early 1980s, ASSEFA has shifted from a land-based to a village-based operational strategy, by facilitating development actvities of traditional village councils or "gram sabha". A gram sabha may encompass a multi-caste village of more than a hundred households, rich or poor, or be confined to as few as forty households dwelling together ina "colony" or a larger village. Though ASSEFA's primary work is in the area of development, they have been running some very interesting credit related activities as part of the developmental work in the Vidhharba region of Maharastra as well as in Dindigul - Madurai districts of Tamil Nadu.

When the ASSEFA undertakes developmental work in any village, the first step is to organize the gram sabha where all adult members are eligible to participate. There the villagers discuss their developmental problemsand try to seek solutions. As one of the possible solutions, the members are encouraged to start a small savings fund caled the Gram Kosh or "village bank" This is built up from small contributions of the order of Rs.1 to Rs. 5 (4 to 6 US cents). The Gram Kosh is utilized to assist members for emerging expenses as well as for production loans.

ASSEFA Staff members observe the practice of self-management of the Gram Sabha and the Gram Kosh for a period of six months to one year. To ensure that the work of the Gram Sabha is truly participatory, no elected leader is encouraged in the initial years and the monthly meetings are chaired by different members. Whatever their size and composition, the central principle behind establishment of a Gram Sabha is the belief that such a village-wide body is a necessary vehicle for development of the village. Asked what the role of a sabha should be, most ASSEFA staff say that -

Over a period of six months to a year, when the self-management capacity of the members becomes evident and the members themselves start dealing with the constraints on mutual help through small savings, they approach the ASSEFA for assistance in taking up bigger investments for development. The ASSEFA contributes from its own resources to the Gram Kosh. The Gram Sabha is advised to utilize the greater portion of the funds at its disposal for assisting its members in the manner and for the purpose they choose. Obviously, the recovery of funds from the members is the responsibility of the Gram Sabha. The usual experience of ASSEFA has been that once responsible self-management has set in, recoveries are almost 100 percent. In rare cases where recoveries are not forthcoming from a substantial number of persons, the ASSEFA has withheld furhter help to the Gram Sabha and advised them that the Gram Kosh money belongs to them and furhter developmental work may be undertaken by the Gram Sabha from limited funds available with them. After such experience, even recalcitrant members have behaved more responsibly and the fruitful association of the Gram Sabha and ASSEFA continues.

The main point of contact between ASSEFA and the villagers are full-time village development workers, who facilitate the meetings and activities of a "cluster" of up to six Gram Sabhas, liaising between them and other institutions (eg. banks, government agencies) and supervising the flow of ASSEFA finance to them. ASSEFA finance may take the form of grants tot he Gram Sabha for collective activities such as establishment of a day-care nursery or employment of a night-school teacher. However, most project funds are advanced to finance loans from the Gram Sabha to individual members.

Contact Address:
M.S. Loganathan
279, Awai Shanmugam Road,
Madras - 600 014, India
Fax: +(91-45) 24 50 56

Hari Srinivas -
Return to the India Page
Return to the Virtual Library on Microcredit