Tamil Nadu Women's Development Project - Completion Evaluation (2000)

Completion Evaluation


The Executive Board approved the IFAD-initiated Tamil Nadu Women's Development Project (TNWDP) in April 1989. The project became effective in January 1990 and closed on 31 December 1998, following a one-year extension. The total cost of the project amounted to USD 30.6 million, of which IFAD provided USD 17.0 million on highly concessional terms and the Borrower contributed the balance of USD 13.6 million. The cooperating institution was the United Nations Office for Project Services (UNOPS) and the executing agency was the Tamil Nadu Corporation for Women's Development (DEW).

Project design and objectives

Target group

The target group consisted of the poorest rural women, with special emphasis on women-headed households. While the project was initially to be carried out in three contiguous districts (Dharmapuri, Salem and South Arcot), during implementation its coverage was extended to two additional districts (Madurai and Ramanathapuram).

Objectives and components

The main objective of the project was to bring about the economic and social betterment of women to improve the welfare of their families and their status both within the family and in the community The project was designed to achieve its objectives through the following components: (a) income-generation activities: farm and crop development, animal husbandry and cottage and village industries; (b) institutional credit: the Indian Bank was responsible for providing credit to village women; (c) informal credit and savings mobilization: the project encouraged group-based savings to meet the financial requirements of group members, particularly small loans, in order to create an alternative credit system to replace the traditional moneylenders; (d) group development: promotion of strong, cohesive groups of women as the organizational catalyst for the economic and social betterment of the target group; (e) institutional support: establishment of a network of social extension workers to provide the necessary social development thrust and support to women. Animators were appointed in each village and one supervisor for every 12 villages; (f) training was provided to women on a variety of subjects, including group organization and management, bookkeeping, entrepreneurial development programmes and legal and social issues. Training was also provided to improve the capacity of project staff, bank officers, non-governmental organizations (NGOs) and social extension workers; and (g) NGO involvement: selected NGOs were contracted to assist in beneficiary identification; group formation; training of animators, supervisors and project field staff; selection of activities; and provision of bank loans and the recovery thereof.


Project implementation arrangements

Project implementation was entrusted to DEW, a Government of Tamil Nadu (GOTN) undertaking. A project management unit (PMU) was established within DEW, the chairperson/managing director of which served as project manager. The executive director of DEW acted as project coordinator, supported by several officers, including a training officer and monitoring and evaluation (M&E) officer. Project implementation units (PIUs) were created in the five project districts, each headed by a project officer with specific areas of responsibility (credit, livestock, sericulture, rural industries and banking). These officers were seconded to the PIUs from various GOTN line departments and the Indian Bank, which, through its numerous branch offices in the project area, was the main vehicle for providing institutional credit delivery. The project relied on NGO involvement in all five districts to support the project's overall activities. A network of social extension workers (village animators and supervisors) supported the project.

Evaluation mission

The responsible IFAD Evaluation Officer visited the project in September 1999 for the purpose of initiating the completion evaluation (CE) process. A brainstorming workshop held during the visit brought together the project's core partners, including approximately 20 women beneficiaries whose engagement and participation was laudable and enriched the discussions. Other participants included project implementation personnel, field staff of several collaborating NGOs, representatives of the Indian Bank and the state government. The brainstorming session provided a unique opportunity for the Evaluation Officer to learn the opinion of several stakeholders first-hand and to hold discussions about the project, thus making it possible to draft the CE mission's terms of reference in an issues-oriented manner. The workshop not only made it possible to develop the CE mission's programme in a participatory fashion but it enabled the partners to comment on the proposed approach and focus of a rapid rural appraisal (RRA) to be undertaken prior to the CE mission.

The RRA was undertaken by local experts between 20 September and 7 October 1999 and a draft of the report was ready for the CE mission upon its arrival in Chennai. The methodology followed included social mapping; seasonality mapping and economic status ranking; participatory gender analyses of access to, and control over, income and benefits; focus group discussions; and other informal interviews. Eight representative target groups were selected for in-depth study.

The CE mission's fieldwork was undertaken between 10 and 28 October 1999. Before proceeding to the project area, however, mission members held discussions with representatives of the Government of India and of various international donors. The mission subsequently visited the project districts where in-depth discussions were held with all project stakeholders, including, among others, representatives of the beneficiaries, NGOs, GOTN, the Indian Bank and project management and implementation staff. The preliminary results of the RRA and the CE were discussed with a wide range of stakeholders in a one-day workshop held on 22 October 1999 and during two wrap-up meetings held in Chennai and New Delhi, respectively.

Savings and loans

The formation of dynamic and cohesive self-help groups (SHGs) contributed to the project's very positive performance in terms of thrift and self-help. Moreover, the role of moneylenders was substantially replaced by sangha (group) loans to meet members' emergency/consumption loan requirements. The savings mobilized within groups (which were then deposited in a bank account in the name of the SHG) were rotated as loans among members and, on average, each member benefited from three-to-four such loans. Subsequently, thanks to the members' good repayment performance, individual women were able to obtain credit from formal sources. Indeed, compared with the target of 40 320, some 87 539 beneficiaries received institutional credit during the life of the project for an aggregate total of Rs. 753.74 million. Loan recovery rates consistently exceeded 80%. Credit for income-generating activities mainly involved animal husbandry and cottage industries, which together accounted for nearly 75% of all loans.


The project focused on districts that were backward in terms of human development, such as Dharmapuri and Ramanathapuram, and other areas with high levels of female infanticide such as Madurai and Salem. The representation of women living below the poverty line, women-headed households and landless households was significantly higher than in government programmes such as the Integrated Rural Development Programme (IRDP). However, the involvement of women from the scheduled caste (SC) and scheduled tribe (ST) groups — who are usually the poorest and most marginalized within the villages — and of widows and disabled, deserted and settled single women was less satisfactory than in the IRDP.

Group formation and dynamics

By March 1998, a total of 5 207 SHGs had been formed compared with the target of 2 688, and 120 960 women had enrolled as members. Individual groups, of approximately 20 members, usually comprised a mixture of castes. The groups were autonomous, democratically-managed bodies with their own procedures governing the operations of savings and loan funds, and decisions were taken collectively. Each group had an animator from the same village who provided assistance to group members on a variety of issues. The majority of groups were cohesive and well regulated and the survival rate stands at about 88%. More than 80% of the groups met at least twice a month, with attendance averaging 80-518. Approximately 65% were graded as ‘A' or ‘B' according to the grading system evolved by the project. Seventy-five per cent belonged to cluster-level federations and, independently or through the federations, took on a variety of welfare and infrastructure activities. Apart from giving a sense of belonging, membership in federations played a useful role in strengthening the groups' accounts and recovery performance. A high rate of replication was visible in terms of group formation and, in 239 sample villages where groups had been operating under the project, some 184 new groups were formed. However, in some of the groups, it was found that the guidance provided by NGOs had been too influential.

Training and capacity building

While the process of establishing an appropriate training programme took some time, it is clear that, during the last two or three years of the project, training became a key factor in ensuring sustainability. That is, intensively trained group members became more aware of their capabilities and of the benefits they might derive through participating in the project; whereas the animators and staff of the project, the Indian Bank and NGOs were better equipped to serve the best interests of the target group. Participation by the stakeholders in training design was actively encouraged, and multifunctional programmes (perspective building, technical and managerial aspects) were developed to suit the needs of individual stakeholders. However, more emphasis on the training of trainers (NGO staff, new animators and representatives) would have been beneficial, as well as training of male relatives of SHG members, government workers in the villages and members of village institutions. Classroom training was the main strategy for implementing this module. It would be worthwhile for the project to broaden its range of training approaches by including visits to well-functioning groups and federations, and through income-generation activities, information/marketing fairs, adopting mentoring/apprenticeship models, etc.

Project management and coordination

Overall responsibility for project implementation was entrusted to DEW. Problems were encountered at the outset due to the time needed to convince all partners of the proposed project approach and delays in recruiting a training coordinator. The calibre of the PIU and PMU staff improved once stricter procedures were established for selecting the project assistants. Despite frequent changes in senior DEW staff, the project was generally managed competently and in an exemplary manner towards the end of its life. One of the most encouraging features of the project was the successful collaboration and coordination among DEW, NGOs, Indian Bank and line departments. However, at the district level, the frequent turnover of key staff somewhat hampered efficient communications.

Transaction and delivery costs

The terminal evaluation report compiled by the Agricultural Finance Corporation (AFC) estimated the average lender transaction cost per Rs. 100 loan at Rs. 2.24 compared with Rs. 3.33 for IRDP. The average borrower transaction cost was Rs. 182 per loan account compared with Rs. 332 under IRDP. The administrative expenditure and overheads incurred in delivering a loan of Rs. 100 under the project were estimated at Rs. 26 compared with Rs. 48-51 for IRDP.

Non-governmental organizations

Non-governmental organizations played a central role in project implementation, particularly in the identification of beneficiaries, formation and supervision of groups, establishment of credit linkages and training of animators. Indeed, the initial selection of blocks and villages appears to have been contingent upon the presence of reputed NGOs. With more than 30 different NGOs involved there were inevitable variations in levels of performance, but stricter screening processes were established progressively. The contribution of the more efficient NGOs was exemplary and their experience proved invaluable, but the weak performance of certain groups was largely due to inadequate NGO supervision and support. Project design provided for a supervisory structure over the groups and animators. While that proved useful during the early years before the efficacy of the NGOs was known, it was allowed to lapse and project supervision was successfully taken over by NGOs.

Monitoring and evaluation

As in the case of a number of other IFAD projects, TNWDP encountered difficulties in the area of M&E. UNOPS supervision missions repeatedly stressed the need to install an integrated management information system, but this was done only towards the end of implementation. Until that time, monitoring relied on feedback from a wide variety of sources, including frequent visits by PMU members to the districts and regular stakeholder meetings at the block and cluster levels. Fortunately, despite the lack of an effective M&E system throughout the project's life, project management does not appear to have been out of touch with realities in the field. This may be partly due to DEW's strong field presence. Evaluation reports were commissioned from independent organizations, and SHGs developed a mechanism for group grading with the support of DEW. Groups used the grading mechanism as a self-assessment exercise, and the desire to be upgraded acted as a powerful incentive for improved group performance. After a lengthy participatory process, a grading system was also developed for NGOs as a means of providing them with incentives to improve their performance.

Project impact

In determining the impact achieved, it is worth noting that during implementation the primary focus of project activities shifted from providing credit for income-generation to the broader aim of empowerment and social improvement through the solidarity of economically disadvantaged rural women.

Poverty impact

According to AFC estimates, 64% of all project beneficiaries crossed the poverty line during implementation, which compares well with government-run schemes. In addition, and perhaps more importantly from the point of view of sustainability, the self-perception of economic improvement is very marked. The AFC terminal evaluation report indicated that, thanks to the project, beneficiary families had seen a 70% rise in their incomes during implementation. The thrift and savings group approach reduced the vulnerability of member households to social and environmental calamities and to seasonal fluctuations in income and expenditure, and dependence on moneylenders was considerably reduced in most project areas. Higher incomes led to improved food and nutrition, health care and education of household members, although gender differences need further improvement.

The RRA findings indicate that, as a result of bank loans, 69% of the women beneficiaries who were previously unskilled labourers have either become fully self-employed or are less dependent on wage labour. Moreover, 65% of all bank loan beneficiaries claimed they had acquired new technical skills and another 20% had strengthened their existing skills with training received under the project. Almost all the groups covered by the RRA exercise reported some degree of collective action to increase access to drinking water, electricity, health care or education facilities.

Contrary to expectations that most of the loans would be used for crop improvement purposes, more than half went towards livestock activities (purchase of dairy cows, nanny goats and ewes) that provided landless and smallholder women a daily income. Apart from animal husbandry, other income-generating activities included such diverse activities as bee-keeping; cultivation of jasmine, mangoes, betel, grapes and coconut seedlings; rope making; fishnet production and repair; mat weaving; tailoring; and pottery. Loans enabled women to manage their activities independently and to have more control over their assets and income. The assumption that women would generally make wise choices because their expertise and knowledge of local market conditions was sound, and the good repayment rates are proof that their choices were generally sensible.

Social impact

Perhaps the single most striking result of the project can be seen in the remarkable increase in opportunities for disadvantaged women to come out of their homes and enter the public domain. Women have also acquired a new physical mobility and have been able to expand their contacts with banks, NGOs and district authorities. According to the AFC and the RRA findings, over 80% of group members became more aware of their political and property rights. By attending group meetings, poor women gained more confidence. The project introduced a new mind-set, which led many groups to broaden their field activities. By branching out beyond savings and credit, the groups initiated community-oriented projects and negotiated with obtained the approval of the authorities for new milk-collection routes, street lightning, bus routes, better well maintenance, etc.

Important social changes have been engendered by the project. For instance, any opposition and interference by men in the initial stages of the project was generally transformed into positive support within three years of the groups being formed, and economic benefits accruing to households through the project made the approach to women's empowerment acceptable to men. In most cases, men were more willing to take on simple household tasks while their wives were attending meetings or training sessions. Gender disparities remain as far as decision-making within the household is concerned, although the RRA revealed a discernible increase in women's decision-making powers on matters relating to children's education, health care and the disposal of household assets. However, only 30% of women in the male-headed households covered by the RRA were involved in the purchase of raw material and in sales of produce. This traditional division of labour is only broken down in the event women obtain full control over the assets and income of their enterprises.

Seventy per cent or more of women interviewed during the RRA stated that they had greater self-confidence; 70% no longer felt any anxiety about dealing with government officials; 70% felt motivated to protest against abuse and exploitation; 80% had attended health and nutrition programmes; 80% were opposed to dowry payments; and 80% were aware of statutory provisions regarding women's representation on the panchayats (village committees). More than 90% had had their children vaccinated and 94% were opposed to female infanticide and female foeticide. With regard to these aspects, although the number of such cases had fallen from 112 to four over a three-year period in one block of Madurai District, female infanticide and foeticide need to be reduced further.

What might require further attention is that a significant proportion of the women interviewed stated that bankers' attitudes had not changed towards poor women. Bringing about a change in attitude will take time and further training and sensitization of bank officials may be required to redress the situation.

It is impossible to quantify evidence in the 'intangible' areas, but what is beyond doubt is that there is a new air of confidence and optimism among the groups. Readiness to come forward with opinions and suggestions is not restricted to the animators or to a few leading members of the groups, but it is clearly something that, in mature groups, has infected even naturally timid members. Significantly, there is a growing willingness among group members to approach the panchayats and district administrators with petitions or grievances; in several cases, members have stood for and won election to both gram panchayats (village assemblies) and block panchayats.

Institutional impact

The effect that the project has had on DEW is unmistakable: major increases in funds and influence have resulted from project activities and new, purpose-built premises have been built. This effect can be observed in various aspects of DEW's activities, with better-trained and more motivated staff, more confident management and greater bargaining power vis-à-vis the state authorities. DEW has matured into a solid institution, capable of implementing poverty eradication programmes efficiently and of providing invaluable advice to GOTN and others on policy and related issues. The main effect that the project has had on the Indian Bank is its ability to persuade bank officials that group collateral-based microfinance can be commercially viable. The future of microcredit schemes in Tamil Nadu will certainly benefit from the generally good repayment record and successful collaboration under the project. The Indian Bank took a cooperative attitude and brought together a team of dedicated officers to manage project lending, but its capacity was over-stretched in remote areas where it has few branches. The bank did not gain financially from its involvement in the project as it agreed to involve itself in the pioneering approach to rural finance introduced by TNWDP without reaping any profits. Project activities also encouraged NGOs to extend and intensify their operations, and the selection and remuneration procedures devised under the project have served to improve or maintain the standards of NGO activity.


According to DEW, about 70% of existing groups possess the characteristics required for sustainability. A special training module, known as the sustainability module, was included in the SHG training programmes to make groups aware of factors affecting sustainability. The survival rate of TNWDP groups (88%) is substantially higher than that achieved in similar projects elsewhere. Half of all groups are already paying their animators' salary and, according to AFC, more than 60% are in a position to maintain their own records and accounts. The majority of groups are capable of building up enough capital to meet the routine consumption needs of their members within three years of formation. However, the TNWDP experience also indicates that the younger groups and those graded ‘B' or ‘C' require more support from NGOs and PIU staff to ensure their sustainability, especially in the areas of management and finance.

The aim is to build up capacity in order that underprivileged members of the community will have both the means and the confidence to gain access to established services and opportunities. Thus, the role of NGOs as initiators and facilitators is expected to dwindle and ultimately disappear; and there is considerable evidence that mature groups guided by intelligent NGOs require their services less and less. The new system of NGO remuneration is designed to encourage this development inasmuch as NGOs payments are not pegged to the number of women accessing bank loans but to group formation, dynamics and sensitization. It also takes account of the progress of groups towards reaching sustainability, including the diffusion of technical skills among its members.

The sustainability of the social impact is to a large extent contingent on the presence of NGOs. It is suggested that, during the coming phase, the capacities of cluster-level federations be strengthened in order that they can take over the motivating role played by NGOs. Federations may be gradually formed into block, district or even state-level federations. So far, about 75% of groups have been formed into cluster-level federations, which are slowly taking over some of the supervisory functions of NGOs and tackling wider social and regional issues beyond the capacity of individual groups. The existence of effective federations may serve as an important aid to sustainability, as that would lessen the need for NGO involvement, provide a higher authority to take on issues that can not be resolved at the group level and involve women in projects relating to longer-term issues of broader significance. Cluster-level federations can contribute to improving savings and loan recoveries, resolving conflicts and cases of financial mismanagement in the SHGs, mobilizing government programmes, and addressing common social and economic needs of villages in the cluster. In some cases, they could even act as financial intermediaries for mobilizing capital from some groups and channelling it to others. Federation membership also gives SHGs a sense of belonging to a larger group. In short, federations can contribute not only to the sustainability of SHGs but also assist in reducing overall transaction costs.

An important factor expected to contribute to project sustainability is that the institutional structure of the project continues to be in place beyond project closure. DEW, which is involved in supporting post-project operations, benefits from the backing and commitment of the State Government and other project partners.

In light of the project's achievements, GOTN decided in 1996 to scale up operations with its own funds. It also announced a project of its own — the Mahalir Thittam — which foresaw a phased extension of project activities to cover Tamil Nadu's 28 rural districts by the year 2000 together with continued maintenance of existing TNDWP groups. The number of TNDWP groups has now reached over 13 500 and approximately 60 000 women's groups are expected to be formed under the Mahalir Thittam project. The positive loan repayment performance demonstrated under TNWDP convinced the management of Indian Bank to continue providing rural microcredit to SHGs under the Mahalir Thittam project. Other commercial banks have also joined in this project.

Lessons learned


The project's unique contribution has been to facilitate the realisation of a very significant potential among women in the rural areas it covered. Although there is evidence of all three, neither good design nor effective management nor bank/project cooperation can entirely explain the dynamism and optimism that observers noted at group and federation meetings. In the latter phases at least, the project did not operate primarily as a credit-cum-subsidy project but as a genuine process of empowerment, and therefore the crucial interaction between the social and economic aspects of the project must not be allowed to disappear. The project has demonstrated that the provision of microcredit can not by itself create the necessary conditions for economic and social change. Therefore, care should be taken in future projects to tie credit provision to group cohesiveness and community sensitization, including training and awareness building of local institutions and individuals involved in the project. Wherever possible, group members should be actively involved in all stages of the planning, implementing and monitoring of activities.

Enabling environment

A key factor in the success of the project was the environment under which it operated. Despite the higher turnover of project management staff, implementation remained on track thanks both to the conducive institutional set-up and the strategic alliance between core project partners (NGOs, GOTN officials, beneficiaries, Indian Bank and DEW) that built on the comparative advantage of different actors. The DEW brought legitimacy, resources and overall vision into the project; the banking institutions brought in resources and helped institutionalize efficiency into the system; and the NGOs contributed by helping to reach the poor and mobilize them into groups. The constructive attitude of all individuals involved was also instrumental and should not be underestimated in gauging the project success as it created an environment that allowed for the efficient coordination and follow-up of activities. The project therefore illustrates the crucial and far-reaching effect that the operating environment can have on results and outcome, and the importance of building trust and respect among the individuals most closely involved in the project from inception.

Group formation and cohesion

A slow but steady pace of formation seems important for effective group functioning. In the initial years of group formation, especially in the new areas, there is always a necessary stage of learning and adaptation which may be inhibited or even derailed by over-ambitious or strictly applied physical and financial targets that may not support the ultimate development objectives of the intervention. Therefore, the evaluation analysis concluded that a flexible and gradualist approach is required, with both targets and regulations kept to a workable minimum. The crucial factor for group cohesion is that, before receiving institutional loans, there should be a period of one-to-two years during which the groups systematically save money and rotate their funds in the form of petty loans for productive, consumption and social purposes. This process demonstrates the potential of solidarity and of self-reliance. It may also play a very important role in group sustainability by showing women that they can accomplish a lot by themselves through group discipline. Other dimensions for effective group operations include, optimal group size, rotation of leadership responsibilities, economic and social homogeneity of group members, continuity of members in groups, and rules governing group operations. The project also illustrates that pro-poor, equitable and transparent savings and lending practices contribute to group functioning and cohesion, as well as group engagement in collective action such as welfare activities, building of community infrastructure and lobbying with government for electricity and other facilities.

Non-governmental organizations

The capacity and performance of NGOs is critical to the continuing success of SHGs, especially in the early stages of group formation. The need for NGO support is expected to diminish over time, as illustrated by the TNWDP experience. Nevertheless, the presence of suitably motivated and skilled NGOs in a given area is of crucial importance in programmes where the initial emphasis is on the training and sensitization of beneficiaries. The project highlights the importance of rigorous screening procedures to select committed and capable NGOs that are driven primarily by the desire to improve the well being of people at the grass-roots level. An NGO grading system and appropriate remuneration modalities, as introduced by the project, should go a long way towards remedying a discernible over-anxiety on the part of some NGOs to form new groups to access institutional credit. Furthermore, the role of NGOs must be clearly defined so that they act as catalysts and advisers rather than as decision-makers.


Performance with respect to targeting the poor is better in bottom-up group-based credit and savings programmes than in credit programmes for individuals. However, attention should be paid to the targeting of subregions, states, districts, blocks and villages, and poverty groups within villages. Microlevel wealth ranking (based on criteria developed by the beneficiaries themselves) and social mapping methods may be used for identifying the poorest. Along with targeting, a ‘saturation' policy and pro-poor approach to group formation and savings and lending may also help in reaching out to the poorest amongst women as they tend to be risk-averse and join groups once they see others working effectively. These aspects may need greater attention in the less poverty-stricken districts. Another issue is the proportion of SCs and STs within each group. No problems are encountered when the community is predominantly ST or SC, but when the proportion of STs and SCs is smaller there is an obligation to engineer the composition of the group accordingly. Although this has worked quite satisfactorily in many cases, there is a strong feeling among project staff and NGOs that it is better not to enquire about caste initially so that it is simply not an issue from the start. Normally, and ideally, the creation of one group within a community will lead to others so that ‘saturation' is finally achieved, including the SC/ST population. This may be preferable to attempts artificially to influence the composition of the groups.


The importance of training cannot be overstressed and, in projects of this kind, the reach of training should be very broadly based. If budgetary provision for training is inadequate, a project's chances of success will be curtailed. In addition to existing training modules, strategies to encourage cross-fertilization of ideas and techniques between groups and concerted action at the cluster, block and district levels should be considered to address the deep-rooted gender-specific causes of poverty. It is also necessary to invest in strengthening the capacity of different implementing agencies (bankers, PMU and PIU staff, animators, supervisors and NGOs) on a series of project-related issues, including poverty and poverty reduction, gender concerns, the SHG concept, savings and credit, and microenterprise development. Stakeholder participation in the design of training modules is particularly essential. The capacity of state and national training institutions to cater to the requirements of such grass-roots development projects also need to be strengthened.

Income-generating activities

It was foreseen at appraisal that the income-generating activities promoted by the project would be primarily land-based and that increased agricultural and horticultural productivity in the project areas would be a central aim. Integrated packages of soil and water conservation measures were also envisaged. In the event, the great majority of income-generating activities focused on animal husbandry and village industries. One lesson here is that land-based activities are unsuitable when the majority of the target population have neither title nor access to land, as was the case with the project. Another is that the principle increasingly adopted by DEW management, that women be allowed to choose the object of their investment, is sound and successful. This also illustrates the importance of flexibility in project design and the need to build on the preferences, priorities and vast knowledge of local people and their communities.


Non-local expertise is of prime importance in this area of activity. The post-production linkage of marketing was not built into the project profiles and led to a lack of assured marketing opportunities, non-remunerative prices or exploitation by merchants and middlemen. Therefore, particularly in projects promoting income-generating and other productive activities, the need to define a priori marketing and processing channels and opportunities is of utmost importance, as their absence may result in disincentives for related programme activities.


The project proved to be highly cost-effective, although the lender transaction cost could have been further reduced had the loans been delivered to groups rather than individuals within the groups. This is clearly an attractive option for the banks but in such an eventuality care should be taken with regard to group dynamics, particularly with regard to loan distribution within groups to ensure that poorer women are not marginalized.

Indian Bank, which was chosen as lead bank in all five districts, struggled with the pressures of financing in areas such as Ramnathapuram and Madurai where it has a limited branch network. A larger number of participating banks would have been desirable, as recognized under the Mahalir Thittam project. The provision of vehicles to bank field staff would have allowed bank staff to carry out fieldwork more effectively.

The SHGs' linkages with commercial banks should be institutionalized, following a period of sound credit operations during which they illustrate proper management and discipline, to enable group members to make a quantum leap in their incomes and well being. This would establish a direct relationship between women and the banks, and ensure continuity of credit flows to SHG members based on their financial record rather than on the recommendations of NGOs or PIU staff.

With regard to group savings, the challenge is to allow for flexible savings by SHG members while at the same time ensuring that internal lending is not linked to the amount saved. Linking internal lending to the amount of money saved may reduce credit flows to the poorest members of the group. A minimum amount saved may be required, but it may be set at a low level that all members can afford. This would also ensure that none of the members adopt negative strategies (such as borrowing from moneylenders or cutting down on their own consumption) to meet the rule governing savings.

Interest on savings should be regularly paid to SHG members, as it would encourage them to save with the group and reduce savings outside the group. It would also encourage poor women who feel they can not risk taking a loan to join the group and slowly increase their risk-taking capacity. SHGs should promote policies that allow members to withdraw their savings after they have reached a certain amount, as this would encourage more women to participate in group activities.

An appropriate interest rate policy should be established for internal SHG lending. In setting their interest rates, groups should be aware of moneylenders' and commercial banks' charges. It may be worthwhile for groups to charge different rates according to type of economic activity for which the loan is taken, thus reducing the burden on very poor women in the groups. Implementing agencies should monitor the SHG interest rates on a regular basis. While it is also worthwhile to monitor repayment rates, the source of repayment should be reviewed to ensure that group members are not resorting to repayment strategies that may not be in their overall interest. In such cases, groups should be encouraged to revise the repayment schedules.

Executing agency

Although DEW is a GOTN undertaking, it enjoys semi-autonomous status and decisions are taken by the its chairperson/managing director. The positioning of the DEW in the Government structure contributed to the success of project implementation in that it was able to benefit from the support of government authorities and line departments while minimizing undue political or bureaucratic interference due to its close association with IFAD and knowledge of the latter's implementing procedures and loan agreement clauses.


The key element in the project's success - the energy of the women themselves – should be preserved and nourished. This can be best achieved by a flexible approach that focuses on the needs, priorities and capacities of the groups rather than on predetermined economic and financial targets.

The project is deserving of further involvement on the part of IFAD to help maintain the independence of groups and of DEW and to continue to learn from the projects' successes. IFAD may consider providing an NGO/Extended Cooperation Programme grant to DEW for the purpose of strengthening NGO capacity in key areas and supporting a post-project monitoring system.

The inclusion of more banks under the extended programme would be useful for the purpose of rectifying problems of access and over-stretched facilities. Consideration should be given also to establishing mobile banking in the more remote areas.

Greater efforts may be required to involve women from the SC and ST groups and other under-represented women. The rule that only married women of 18-55 years of age can join the SHGs should be changed. Poor single women settled in the villages and elderly women able to engage in productive work should be allowed to join the groups and, since they are in a vulnerable position, adolescent girls and young women should also be encouraged to become members.