Aloysius Fernandez prepared for a life of service in the Church – and was even ordained as one in 1953. But when he witnessed the abject suffering caused by the Bangladesh refugee crisis and the blight of poverty on people in Maharashtra in times of drought, he decided to leave the Church and pivot to working in development. An economist by training, Al Fernandez spent over forty years at MYRADA, helping transform the idea of financial inclusion and microfinance, and pioneered the Self-Help Group model in India. In 1987, NABARD, the national bank for agriculture and rural development, provided the first social venture capital to these Self-Help Groups, setting off a veritable Self-Help Group movement in India and laying the foundation for microfinance in the country.
Al Fernandez has held many illustrious positions in his career – as the Deputy Director of Caritas India, as Executive Director of MYRADA, as Chairman of the Board of microfinance institution Sanghamithra Rural Financial Services and as the Chairman of NABFINS (Nabard Financial Services). But his contribution to the nation goes beyond these titles.
In this episode of Grassroot Nation, Al Fernandez is in conversation with his colleague Vidya Ramachandran, a long-time friend & colleague of Al.
- The Myrada Experience – 50 Years of Learning by Aloysius P. Fernandez
- Myrada’s Publications
- South Asia Partnership Canada
- Myrada- Spin off Institutions (MPIs)
- Pedagogy of the Oppressed by Paulo Freire
- The Myrada Experience of “Building Poor Peoples Institutions” by Aloysius P. Fernandez (2015)
- PARTICIPATORY RURAL APPRAISAL AND PARTICIPATORY LEARNING METHODS By Myrada
- Why Sanghamitra is Different by A P Fernandez (a chapter in the book Microfinance in India edited by K G Karmakar)
- WATER SHED | ಜಲಾನಯನ ಪ್ರದೇಶ | MYRADA KAMALAPURA KALABURAGI | BFT TRAINING by Siddhu Power M
- MASS NGO GHATAPRABHA BELGAUM by MASS NGO BELGAUM
Approx run time: 80 Minutes.
Note: This episode is produced for the ear and designed to be heard, not read. Readers are encouraged to listen to the show to get the full experience. The transcripts are meant as support documents and may not include inclusions from the day of recording and may contain errors. The audio version is the final version of the show. Ignore the timestamps mentioned. Ignore grammatical errors.
Welcome to Grassroots Nation, a podcast from Rohini Nilekani Philanthropies, a show in which we dive deep into the life, work and guiding philosophies of some of our country’s greatest leaders of social change.
Aloysius Fernandez is an economist and social worker who has dedicated his life to work in development. Born in Burma, and trained as an economist, Al Fernandez prepared for a life of service in the Church – and was even ordained as one in 1953 – but when working at Caritas India in the early 1970s a its deputy director he was witness to the Bangladesh refugee crisis where he saw abject poverty and suffering, and the blight of poverty on people in times of drought in Maharashtra and other parts of the country and these experiences led him to leave the Church in 1976 and pivot to working in development full time.
Aloysius Fernandez spent over forty years at Myrada, where their work transformed the idea of financial inclusion and microfinance, and pioneered the Self-Help Group model in India.
His work in the 1980s with the primary agricultural credit societies in rural Karnataka led to a deep understanding of the value of community in India – of learning from them and supporting them. Myrada began forming Self-Help Groups and in 1987, NABARD, the national bank for agriculture and rural development provided the first social venture capital to these Self-Help Groups, setting off a veritable Self-Help Group movement in India and laying the foundation for microfinance in the country.
Aloysius Fernandez has held many illustrious positions in his career – as the Deputy Director of Caritas India, as Executive Director of Myrada, as Chairman of the Board of microfinance institution Sanghamithra Rural Financial Services and as the Chairman of NABARD. But Al Fernandez’s contribution has been so much more – he has been a mentor, a guide, and a lode star to many people working in the social sector.
Al Fernandez was awarded the Padma Shri in 2000 for a lifetime of development work for India’s Samaaj.
In today’s episode, Al Fernandez is in conversation with his colleague Vidya Ramachandran.
So you have been known as a guru of many things, you have been known as a development expert, as an economist, as a conservationist who has been devoted to watershed development, as a person with expertise in building organisations, as a public policy influencer, there are many areas in which your name keeps cropping up in development circles. But your early days were spent steeped in philosophical studies and religious training. You have been a member of the grand edifice of the Catholic Church. You have described yourself, or referred to yourself as a diocesan who has been groomed by Jesuits. So how much of that interplay of philosophy, religion, diocesan, Jesuit tradition influenced your subsequent growth as a person concerned with poverty and the need to work on issues related to poverty?
Good question, Vidya. You do mention this interplay between diocesan and Jesuit influences. But there was a 3rd major influence in my life and that was my family tradition. Now, for 200 years, my family has provided priests and nuns to the Catholic Church. It’s part of the tradition. And I, having been brought up by my grandparents since my parents were abroad, was expected to carry on that tradition. When I was about 14 years old, I think, I joined the seminary- it was the preparatory (seminary). After that, you go to a major seminary, to study for the priesthood. Now there are many seminaries in India, many that train the diocesan clergy. Diocesan clergy is those priests who run the parishes and all the rest of it. But there is one major seminary, it’s called the Papal university which was located in Candy Salon for years and which shifted to Pune, just before I was selected to go there. This university could give degrees which were recognised by various universities and it had students from all over the world. So there was a rich interplay of people. So sometimes you had the best football team because we had the Italians and Spaniards and best hockey team, we had Karachi people but there was also good interaction.
Now that was run by the Jesuits. Now what is the major major difference between that Jesuit training and the training you got in other Diocesan seminaries and this is this – the Jesuits not only taught us theology like scripture, which the priests are supposed to do, but they tried to give you reasons from history to buttress your faith. They just didn’t say believe this, believe that but they gave you reasons, and they had to be verifiable reasons.
They also quickly absorbed the teachings of the Vatican Council. Which was at that time when I studied in the late 50’s, early 60s, had come out with very open Catholic Church. It was open to Indian philosophy. Many of us studied Shankara, we studied Basavanna, in fact, I wrote a paper on Basavanna, since I was from Karnataka, and Mahatma Gandhi was very popular. But they also stress social justice, the Jesuits. Let me give you an example- see you can draw quotations from any religion to justify anything. As we say, the devil can justify himself from scripture. Now you have this in the Bible, the story of Jesus being the Good Shepherd who looks after the sheep and looks after everybody. But you also have the story of Jesus, who whipped the money lenders and chased them out of the temples and said, “You have made the House of God the den of thieves.” That is a different picture of Jesus. Now it all depends on which picture you follow. And the Jesuits followed both, so you had a choice to make. They just didn’t keep to the Good Shepherd, which is usually the dominant theme in the Catholic Church. You never hear about Jesus chasing out people. So you had first Jesuit, second the Vatican Council.
There was another influence, see, like any university, apart from the lectures, you have a lot of extra curricular things going on. So you have one group doing Indian art, one Indian philosophy, somebody doing something. And you also had a group who ran some courses on students who had been in the young Christian workers movement. Now the young Christian Workers Movement was originated in Belgium and France, where workers were organised in groups. And the methodology was see, judge, and act. Now you saw, not just look, there is a big difference between looking and seeing. Then you would judge in the context of your belief, and you act it, and then you review your action. And one of the instruments of this methodology was keeping a diary. So all those who joined this group had to keep a diary and note every day what they saw. And it was… it helped us a lot. So this also had an influence in my life.
So when you were still a part of the church, you spent your early days in the area – Briand Square area and City Market Majestic – that area where there were a lot of poor people at that time. Does your work from that time carry indications of your orientation towards economics and also towards building organisations?
Yes, I guess every experience in life, in my life at least, had an impact. I must also say that the Vatican Council taught that the Catholics were one body, they were one community, one Samaaj. And I was quite happy about this. But since my training also was to see, judge and act, and see not look… When I was posted in Saint Josephs I was posted by accident for 5 months, 4 months in Saint Joseph’s. The rest of my life was as an administrator of the Archbishops house. But so for me this was something new, to be in a parish. And I had a great time but I just wasn’t somebody that could just do the usual parish work.
So the first thing I noticed was this big Samaaj idea, it was not reflected in the church because when I walked into the church, the centre, which was the biggest portion, was occupied by all the poor people. And the right side of the church was occupied by the richer people who were sitting on benches and chairs. So it was not exactly a Samaaj to me, which I had been taught to believe. At least it didn’t look like a samaj to me. If it is not economically homogeneous, if it is not socially homogeneous, it is not a Samaaj. You can call it a Samaaj, but it is really not a Samaaj.
Another example I can give is the Cooperative Society which I discovered when I joined Myrada. The Cooperative is an instrument of development which the Government of India has promoted just like the Panchayati Raj is the instrument of governance which the government has promoted. And Myrada was working with the Cooperatives, but the Cooperative is the word- what better word for Samaaj can you get than Cooperative? Cooperation is community. But when I started working with the Cooperative I found it was not a community, they were not helping one another. In fact, they were using the heads of the Cooperatives, the President, Secretary, Treasurer, all came from the rich families in the village, from the upper classes, and they used the cooperative to exploit everybody else. They would borrow money from the cooperative at 5% to 7% to 8%, and lend to other members of the Cooperative at 40%. And if they borrowed money, the poorer families, they have to work for these larger people. And the rich used the Samaaj to exploit the poor – that was the bad part of it. This is how the Samaaj ran. So you have to be very careful. If you put cooperative or a community structure on the society that is structured by power relations it doesn’t function like a Samaaj.
So, you have never experienced poverty yourself, but you have talked about how the Church sometimes enables you to experience poverty which is why probably so much of Conscientization and all that work in India has been spearheaded by the Church. So maybe you want to say something about that.
Yes. This whole thing of Conscientization really was, it came from South America, it was part of South American philosophy. But when I got introduced into it was very interesting. It was in a group of students in Bangalore who had read Paulo Freire’s Pedagogy of the Oppressed. And they were not students from poor, they belonged to families who were running the press. One is still very active – police, government and well-off children. And I got interested in this Pedagogy of the Oppressed, because to me I found that there are no teachers and students, and according to Paulo Freire, teachers and students both learn together, both question together, both reflect together, and both participate in action – you don’t just talk about it. This is another version of see, judge, act and review, really. But the seeing was deeper here. It was not just beyond looking, but the seeing was applying tools of structural analysis.
Now, I did pursue this methodology of using this structural analysis in the early 70s when I studied sociology in the University of Leuven, Belgium. And I gradually began to see, because we used to get experiences from all over the world, South America, where this ideology was used, I began to see that while this approach led very often to violence, it often did not change the system.
One set of oppressors were replaced by others.
Now during all of this, of course, the good old Marx and this Das Kapital was a popular book in those days and all of us read Marx and in fact I read part of it where he wrote part of it in Brussels, which is today a pub. But once we got a bit disillusioned, we would have a glass of beer after every few pages and that helped us to really give a balance, you know, I’m not certain if all the stories are true, but that was the myth behind the place.
So I began to get disillusioned with these big ideas and I began to realise that change has to come from the bottom if at all and it has to come over large sector of people who, in some way, have a common cause. Now what exactly that was, difficult to say because it changes from section to section, from strategy to strategy, from country to country, but it did help me to see that the way forward was through small groups of people.
And one good example of this success is the whole Rabo Bank of Holland, which is based on Cooperatives, genuine Cooperatives because people are all economically homogeneous, they are not from different castes or communities, and it was only the Rabo Bank that survived all the banking crisis that had affected the world- but it survived because it was based on small communities, the Rabo Bank.
After all the experiences that shaped you, because you belonged to the Church, you also had the experience of dealing in the rubble of war. And you have then thereafter, have maintained that war disaster is also a good training ground for development. So would you like to talk a little bit about that war experience and why you think disaster shapes people in positive ways too.
The war was the Bangladesh War, 1971, where I was asked to go and look after the refugees. So I left my studies in England and came back to do that. I was just told in Bombay that there is a problem, and there was no TV in those days so we knew much more about what was happening in London than you knew in India. But I was told by Col. Gracious, “There’s a big problem, we want you back. Money is promised from all over the world, but somebody has to run the show. Would you come and do it?” I said, “Well, I don’t have a choice, so I’ll do it.” “So here’s your ticket to Calcutta and here is ₹10,000. You will get it from the secretary downstairs.” That was my introduction to development.
As I said, we were given the opportunity to by our Jesuit education to have reasons for our belief, by the Vatican Council to be open to other sets of beliefs, and all this was within the framework of the Catholic Church. So you were protected by the Catholic Church. And a person in my stature, which I was pretty high up in the structure, I was almost at that level of what you could call Joint Secretary in the government. Life was fine, I mean. But Calcutta the situation was – the whole ecosystem collapsed. There was no, no sort of Church influence around me, it was the refugees, it was this, it was that, it was politics, it was the government, and it was a new ecosystem. Now, once you were outside this protective ecosystem and you began to see things, you began to realise there’s a whole new world.
I wrote about this in my book, it’s on page 377 –
“This experience challenged several of the beliefs in which I was grounded as a priest. I was trained to be detached from worldly even, but how could I be detached from the suffering of people I had come to support, with the objective of providing whatever little was possible to keep them alive and healthy till they return to their homes? Their sufferings and deaths were enough to undermine my detachment. I had been trained to consider myself to be God’s chosen one, I had been taught to believe that I had been empowered to bestow God’s forgiveness on others for sins they had committed. A mobile Ganga, as it were. What sins had these people committed to suffer so much? Except vote for the wrong person according to their oppressors from West Pakistan,” they voted for Mujib, if you may not know, which would have made Mujib the President of Pakistan. “Yet I found strength and power in several of the refugees I interacted with. I had been taught that Catholicism was the only path to salvation, and therefore conversion to Catholicism was the only way to reach the Supreme Being. Here I found thousands of local people who were not well off, but were willing to share what they had with their fellow human beings. Surely they too would find a place in Paradise.”
This experience of disaster changed a lot of people’s lives. IBM was still functioning in those days and I got quite a few people from IBM who joined me and what I saw was that they never went back into the private sector, they all went into development and you know, and so did I. There was one more thing I must admit that I was definitely consumed by a strong ambition to rise in the Church. One reason may be I thought you had to be high up to change the Church. But there was also this ambition to and I had all the background like I had what you would compare to IIT and IIM, that’s what I had in the Church. So you were already sort of selected to be somebody. But what happened was, Bangladesh experience knocked that desire out from me completely.
And it was not only Bangladesh, it was the cyclone in Orissa, it was the Bihar drought, it was the Ramnath drought, it was the Maharashtra drought all 73, 72 and before. All of these droughts and cyclones resulted in several NGOs, several volunteers who today are the NGOs all over the country. And in our own case, I used to tell this story to Myrada that you may have come from a MSWs but until you have experienced this, you will never understand development.
So then you left the Church. The Church lost you to the secular world. So you went to Selly Oak and then you were a teacher for a while. Then you went to CIDA and you went to the- showed up at the wrong CIDA and but then you decide to stay on there and then eventually Myrada.
Now that was a difficult part of my life. This happened in 75, 76, and by that time I really had lost all the essential beliefs on which my whole priesthood was founded. And sort of the last little breaking point was I had a major conflict with the Director of… I was the Deputy Director in charge of Operation, but there was a Director who was a layman, very conservative layman and I had a big confrontation and that point I suppose I sort of decided I had enough.
Some way or the other I walked out of Caritas. All I did was sat on my scooter, I had my personal scooter and I left. I used to stay in the Bishops conference this is a big in Goldakhana, you know. If you see there is a big red building, one room was mine, bathroom, toilet and common dormitory. So I just walked out and that night I decided where to stay. So fortunately there were some Tamil families who had come from Burma. We have a Goan-Burma background and my uncle was a Priest there. So, I was passing by, I said, “Let’s go and see how they are.” They said, “What has happened?” I said, “This has happened.” So they said, “You stay here tonight.” So I stayed in their place tonight, at night and next day I went back to Caritas to collect some few things and then I got a message from the Secretary saying there was a call from the Canadian Government asking for you. So I said, “What do they want?” They said, “We don’t know, they said… .” So I took the number and I called them. There was a guy called Rod Haney, Roderick Haney, he said, “Oh by the way, would you like to work with the Canadian government?”
So I said, “Yes, I will work with you.” He said, “For six months we have a contract.” I said okay. I asked him who the hell told him about me – this was in 87 or something 86. But the basic story is when I was working in 71 in Bangladesh, one of the Canadian guys called Andre Gingras had worked with me and he told Rod Haney that in case you want somebody in development you catch this fellow. So he said, “That was in our minds, nothing was working all this time, and our programs are not going anywhere so you come and tell us what to do.”
But it was only a six month contract and then some friends of mine asked, wrote to me and said, “See there is a post for, there is a tutor and development studies in the Selly Oak colleges in Birmingham which is attached to Birmingham University, would you like to?” I said, “Yes, six months this year so… .” So that is the time I have married Deepika. So I went off to England, I got that call. It was a beautiful 82 acres, it was the Quaker and I had heard of it – the Gandhi, Mahatma Gandhi stayed in one of the colleges. It was called the Quaker Colleges. And so, it was a beautiful place, nice life, tutorial – you know the methodology. But after about a year, one of the Canadians wrote me an aerogram, saying, “I’m sure you are fed up with teaching, why don’t you come back to join us on your own terms and conditions.” So I said okay, so I said, “Let us go back.” They said, “What, you want to go back?” I said, “Yes.” So we went back and I just said, “Keep a house for me.” So they got a, there was a house in Vasant Vihar. All the Canadian governments have those houses and that’s how I came back to India because I was happy there but I was not satisfied. I wanted to do something in development yes, but development in my own country I said let’s go back and do it. So we came back to India and and we had five, four-five years the Canadian government and then I got fed up again with the Canadian government because once you have reached a certain stage in the government, you get things done very easily.
So we did a lot in this – the South Asia Partnership I conceived,
So I formed a committee in every country – India, Pakistan, Sri Lanka, Bangladesh which vetted all the proposals from India. So that they took the decision. And then you had a South Asia Partnership National Committee in Canada, which then received these proposals and selected them. Now this opened the whole doors to people. And in order to encourage them to do this, we started with the nine-one. We said for every one dollar the NGO raises, we will raise nine.
We, meaning CIDA?
Yeah, CIDA. I was in the government, yes, so we will raise nine… .
South Asia Partnership took off in 82-83 internationally as a concept. And by then I came to Bangalore in 82 and by that time we had organised it must have been about 84 or 85. So this was a power shaker and it lasted for many years in Bangalore.
The other big program I did was what we call the country-focused program. This was in 1980. And so I said, “ We will get NGOs involved, but with government money. So you are not talking about one million Canadian dollars, we were you know you are talking about much more than that.
Now we said, “What are the country focus?” At that time we said, “Alternative energy,” we said “forestry,” and we said “soil – dry land agriculture.” That time the government said why not, Mrs. Gandhi and all were… Biogas you remember? It was very popular so we picked on Biogas and AFPRO was the NGO and in Canada it was Interpares. So we gave them the money and AFPRO ran the program in India and Myrada also was at, got, we were one of the biggest Biogas promoters in those days, thousands of them. The second program was the Dryland Agriculture project. That, we signed at the last minute and we took up in Andhra Pradesh in a big project, and they wanted somebody to be the partner in India.
So I decided to leave CIDA and come to Myrada and then, and we changed the agreement with the government at the last minute and made Myrada the local partner. So that gave us some money. And this decision was made at the last minute, which means I had to leave Delhi and come to Bangalore. So we made this decision. So that was the story of how I came into Myrada.
So when you came to Myrada, this was 1982-83, Myrada had sort of closed with the Tibetan programs working with Indian communities and working on the Cooperative Society Model, but just sort of getting the hang of Self-Help Groups which were not yet, you know, called Self-Help Groups or whatever. Now you have always maintained that the Self-Help Group has been a discovery and not an invention, you know, so why do you say that?
An invention is something that you sort of come out with, you discover, you invent. A discovery is something like you find that something that is already there, okay? It’s like you discover gold, you don’t invent gold. Now, in order to do that, in most cases when we look for gold we try to invent it and not to discover it, that’s the problem. So because we are so loaded with our own baggage of our past, our education, our… . In fact, I found the people who succeed in life when they come into development are the biggest failures, because they have to de-school themselves. Just one lesson that Evan Illich came out very well with and I run classes on this – you cannot jump from one sector to another sector unless you de-school yourself. You have reached perfection in one, but if you apply the same learnings to another sector you are bound to fail. So what the biggest problem in Myrada was, how do you really de-school sufficient number of people? Therefore you have to have certain priorities.
For example, I say, I have this five lakhs, I would like to put it in training my staff. Now, this training, I avoided having an office, we could have built a beautiful training centre in Bangalore, we said no, we will train in what we have done – point one – not in what we are talking. The trainers will be the people, not we. Thirdly, training will not be given randomly, that means we will not advertise training. And people can come from different organisations – no. You have to come from one organisation – ten or fifteen.
But if fifteen people come, there is a critical mass that can go back and achieve something in that organisation and we will ask you what you want and we will send you to that project which has succeeded in doing what you want. And we also introduce several methods in this because to shed your baggage is not easy. See, so there’s some of this methodologies that helped us was – PRA, Participatory Rural Appraisal, which was nothing else but Paulo Freire’s Conscientization Approach where the people and you studied together, analyse a problem together, design the budget together and implement together. It’s a learning on both sides. And Appreciative Inquiry – that is something new which we learnt, because what struck me was, if, in simple, if people are living in a situation of scarce resources, uncertain income, and yet they have survived, so they must be good managers no? It’s to me very obvious. They must be good managers. So Appreciative Inquiry helps you to sit down with the older people and say what were the problems you had in your history that you recall and how did you manage them? And they then begin to see that they had so much of strengths. Now we also realise that in those days the most popular classes in development was Problem Tree Analysis, Needs Approach. But if you work on problems and needs, you make people dependent on you. And they will always be dependent on you. Why? You are going there with education, you are going there with money, it’s so easy to put the problem on your back and the solution on your back from their back.
But if you believe that people have strengths, then you look for them. We don’t believe people have strengths. We go with a ready-made solution, this is the problem in our whole development situation. So and, so we began looking for strengths and what are the strengths we found? One was that people had this relationships of mutual trust and support which we called affinity. This existed in India, that’s how India survived. If you looked at the floods in Bombay some years ago and the floods in New Orleans, you could see how the communities responded so differently. Because there is, in Bombay, there is affinity, there are people supported one another. If you look at the whole Bangladesh operation, why did the people support these refugees? Because there’s some sense of affinity.
And so in the village, there is always a group of people if they want something they will go and ask. So we said build on the strengths of people, not on their needs and that message I think was very strong. Now to identify people’s strengths in my days was very difficult because the entire thing was needs, needs and unfortunately needs is what… . See, if I feel that somebody needs something, I feel that I’m doing something good. If I feel that people have some strengths, then I’m a bit, you know…. But we have to accept that people have strengths and yet they need our support. And that’s not an easy thing to arrive at.
See when you say people’s strengths, is that also one of the things that help you think that instead of getting people from, let’s say a Pradhan or an Irma or somewhere else, you have staff already in the organisation, these staff are drawn from amongst the communities that the organisation’s working with, which they also have some strengths and therefore they can be, you know, this whole training program can enable them to function as you know, more professionally or did you… Because I remember that there was some talk about bringing people from outside and then exposing them to rural development, and then making them live in rural areas and work there, and you did not choose that approach.
No. To me, Myrada was very fortunate in getting staff who were all graduates. In those days jobs were difficult to find, so very often they couldn’t get jobs because of reservations, they couldn’t get this… . And many of them were from the rural areas and I realised when I walked across with them in the village I would try to ask, “Is this common land? Is this private land?” These guys did not need to ask. As they walked they knew that from the look that, “Sir idhu yella Goma land, idhu yella private land.” They know they don’t need to be trained. So why not use those strengths? The other issue that we talk a lot about is soil. They know what is good soil, what is bad soil but we will bring all sorts of gadgets to find out, know they know. They will just pick up a soil like this and they will open and tell you, “Sir, this is no, this is not very good. This is good this and this.” These are the things which we need. This was PRA. PRA was nothing else but using traditional methods and then putting it in a nice graph and chart so that people get impressed.
I remember one day I was in Kolar, it rained quite heavily for half an hour. So I went out to people and said, “Ivaaga male bantu, so you can do sowing tomorrow.” One woman said, “Illa Sir.” I said, “Why? You had good rain.” Then she poked a finger in the soil and she said see the heavy rain nothing went in the soil. It has to go so much in the soil. So whereas if you had gone and looked at the rain gauge she would have found enough of rain to sow your seed. For her it was not… . So we have forgotten to see these strengths. But the point is its, while people from the local area their skills are often looked down upon. Because if you, where, you wont ask them to take the soil in their hand and tell. You will bring one big document, paper and say, “pH factor, this factor, that factor it has to go to for soil testing and all.” So you tend to downgrade their skills. But at the same time, it’s also difficult for people who come from outside to shed their baggage.
So those who have been in the field and spent time in the field is a different, different… . So this is a double sort of approach. You have to get people from well organised institutions to shed their baggage and you have to get people from the rural areas to really in a way understand their own strengths. Then you have a level playing field on which they can exchange.
In 1991, India liberalised its economy. Here Al Fernandez speaks about this moment with Vidhya.
But one of the things that kept Myrada together also was that, and I put this in my book, is that our salary structure was very flat, because when this took place in Narasimha Rao’s time I happened to have a meeting in Delhi with quite a few senior government officers who thought that I would be against liberalisation, naturally I’m an NGO. So, I said, to their surprise and to their shock, “My dear friends, the people I work with have lived in a liberalised economy all their lives.” So they got a shock of their life.
I said, “Their salaries are paid according to the market, they borrow money at high rates of interest and they hire and fire.” I said, “All of us here are the guys who are subsidised. Every single one of us are subsidised, not them.”
Today, 50% of our GDP, 45-50% is in the informal sector, and over 90% of our employment is in the informal sector. Perfectly liberalised, and I wrote a paper on this for the World Bank years ago and was severely criticised when I said, “An informal sector is not a load of free riders.” Informal sector in national economics is looked at as a load of free riders, and in a country like India it’s an essential part of the economy. So you have to take them into, factor them into all your decision making. And today it is a lot of problems we are having on account of the inability to factor the informal sector into our planning. Therefore the reforms of 1991 were perfectly important.
But the one problem which I think is becoming more obvious recently, and the Self-Help Group movement will give you an example – the Self-Help Group movement, was really an effort to shift the informal people in the informal financial system, which was exploitative, to the formal financial system. That was the effort, but it did not say tomorrow morning you will all open an account and you will get money and you will draw money. Nobody has used it. It has been used for drawing money, but not for taking loans. Because the 2 systems don’t fit.
So the Self-Help Group was an intermediary system which the people designed. They said we’ll start with savings, we will lend our savings, we will not fix the interest rate, it will depend if it is for health you will give, you can give less, if it is for something else, you give more. We will not ask you to repay every month, for example, if you buy sheep okay and you will sell after six months, you repay only when you sell the sheep, not the… . All the finance models today is you repay immediately the next month. Self-Help Groups Never said that. So there was a repayment period which was adjusted to the nature of the asset. Okay? Secondly, it said you give money when you can because income in the rural area’s lumpy, it doesn’t come in EMI, there is no Equal Monthly Instalment in the rural area whereas in all our systems it has to be Equal Monthly Instalment.
I have several Self-Help Groups in Karwar area which are fishing. They catch fish one day and they want to return the money because they get a good catch. You say, “No, no no you have only to return so much that, because your… .” That’s the system. So that did, so the Self-Help Group, what helped them was each of them visited the bank in turn. So they built up a relationship with the bank, and when we asked them what they benefited most from, high on the list was, “We are now respected by the bank.” So, so many Self-Help Groups on their own, after they saved in the group, opened their accounts in the bank. But it took time whereas today you want to do that immediately, you want to take the farmers, you want to tell them there is no, not going to be any procurement tomorrow you deal with the, with the, with the market. It’s not going to work, they have no idea how to deal with the market. There has to be a transition strategy. Today you want your desire and your gratification time difference to be ten minutes. No, you can’t do that. In development it takes a little time and if you don’t understand this we have got a problem.
So there is another example that you are fond of using. So one of the women in a Self-Help Group said, “Today when I, when you go to the bank, the bank manager pulls out a chair and then orders, orders a coffee or a soft drink. And we want to reach that stage where when we go to the bank, the bank manager pulls out a chair and offers us coffee.” You know, but it is gradual and it cannot happen across… one. The other one, that was about the lady who questioned you about whether you wrote your own books of account, that empowerment does not mean that I know how to write my-
We often identify empowerment with the skills we have. Not necessary. Empowerment really comes if allowing people to develop themselves. And the self help Group was an atmosphere where each one could develop themselves. Everyone has potential, some may use fully some may not use fully but they must have the space. They don’t have the space in the family, the husband is there, mother-in-law is there. So they need a space to develop themselves. In fact, when you first started Self-Help Groups, the men hated. They came and caught them by the hair and pulled them out, they threw stones on the door, then they burned, they burned the hay on somebody’s home where they were meeting on the roof of a… and for long time they would like to eavesdrop, they would listen to what they were trying to say. I mean, it creates a, it obviously shows us a different power centre emerging.
Now the self Help Group was an institution. In an institution everybody has equal power. That’s an institution. We learned from the Rotary Club that you change your President every year. So we used to have that rotation also, so everybody became president. So what we built were institutions which were empowering. Let me give you a very practical example when we started with a Devadasis program.
In the case of Devadasi, the strategy of the government said, “We take the Devasis and we will put them in, we’ve got land, we will settle them there, give them 2 acres, give them a cow and some weaving machines.” So I said, “One thing missing.” They said, “What?” I said, “You put a red light there that will become a brothel,” which has become. They had another model called Gayatri colony which has, they did this, it has become a Red House, Red House area. So we changed the whole strategy from resettling devadasis to keeping them where they are, reducing their vulnerabilities.
So we started with Self-Help Groups, Devadasi Self-Help Groups. And in 1991, one Devadasi was identified. She ran away when she was first met but by winning her over and making her a Self-Help Group member, and training her, she gradually came up – because she had used her potential – and we then formed a Society of ex-Devadasis called MASS whatever it stood for, and she ended up being the Vice President and President of MASS. Now that’s empowerment to you.
[ARCHIVAL AUDIO ABOUT MASS & SITTAVA JODATTI SPEAKING ON MASS]
Sitavva Jodatti is a social activist and former Devadasi who has worked to end the Devadasi system in India. She is the CEO of the Mahila Abivirudhi Samarakshane Samasthe, or MASS, an institution of former Devadasis. MASS was established with the support of Myrada and the Women Development Corporation. The former Devadasis were trained and formed into small Self-Help Groups that provide financial support. Sitavva Jodatti was conferred with the Padma Shri in 2018.
See, one of the things that you have said is participation is meaningless unless it is rooted in institution-building and therefore participation on its own, you might as well not even attempt it, you know? So when you say that, I mean, what exactly do you mean? Why is participation meaningless unless it is institutionally anchored?
See in general, this word ‘participation’ is like God. Each of us has a God, what we call Ishita Deva. And each understands participation differently. There is nothing wrong with it, but it just, we understand it differently depending on the context in which we are functioning. For example, Myrada is an NGO, its objective is to make people independent, its objective is to give them power and to set them up separately. Its objective is not to keep them in an institution like a company has to do with… . Attrition in a company is not looked at positively, attrition in Myrada is looked at very positively. In other words if a person can stand on their feet and separate from the organisation, Myrada has achieved its purpose.
For Myrada, participation has no meaning if it does not include power. Participation for Myrada and in development when you are working with the poor is how do you empower people? Therefore I call it Effective Participation. Yeah, just like in economics you have Effective Demand. So the people may be hungry but they have no money to buy food, so it’s not effective. So people may want something but they are not able to manage it, so it has to be effective.
How do you make this effective? Myrada, we discovered that the first way to make it effective is to build on people’s strengths. People’s strengths, not on people’s needs. And how do you find these strengths? I say through Appreciative Inquiry, through personal contact with people, to listening to people, that’s something that we don’t do because we are so full of our education, our culture, we think we have all the answers to problem.
And there are lot of groups of people, all have strengths – that’s common to everybody. What you need to do is to see whether they can achieve what they want to achieve, with the strengths that they have, or do these strengths need to be enhanced? Okay? And then the question comes about, what what skills you give people.
Now in the Self-Help Groups, what happened? People discovered that they needed an institution which could give them fast credit, credit without exploiting them, contrary to the Cooperative Society where the Secretary and President of the Cooperative Society used to give them loans but also demand higher interest and make them work on their fields and make them like bonded labourers.
And so because they wanted this, the Self-Help Group started where they saved and lent from their savings. So in that case they needed skills. So we had to introduce training – how to meet regularly, how to have an agenda for the meeting, how we kept the minutes, you know, how, then training on financial issues, basic literacy, numeracy was what they wanted. So in order to handle their financial transactions, they needed certain skills. So depending on what they want, you have to, you have to provide them, to achieve what they want to achieve. So differs from group to group.
And to finally conclude, if you empower people, people will then become independent. As I said earlier, we learned in Participatory Rural Appraisal to hand over the stick. And if you know the stick is never handed over, the stick has to be taken away. And it can be taken away only by an organised group of people who are empowered, which is what Myrada wants to do. Therefore when I get an institution that Myrada started like MEADOW which now manufactures all these chains, watch straps for Titan, and for Tanishq it does a lot of jewellery, they are on their own. They say, “Oh don’t they come in?” Why should they come in? They are operating independently, they make their own decision.
So then on the one hand, we have the Self-Help Group, which started somewhere in some small village and then went on to become an international kind of an organisation, known, you know, internationally known and practised across the world and all that. You also have things like MEADOW and MASS. MEADOW is Management of Enterprises and Development Of Women is what it started as, as an ancillary to the Titan Watch company, but now an independent company on its own, running without any input from Myrada for the last fifteen years at least. Totally independent. MASS is another organisation, Mahila Abhivruddhi Mattu Samrakshana Samsthe, which is an organisation of people who used to be known as Devadasis, who now call themselves ex-Devadasis and who are again an organisation which has functioned for about 15 years or so without any connection with Myrada, right? So these are successful organisations, Self-Help Groups, MEADOW, MASS. But then we also know that there are certain institutions that have not been successful, I would say for example Watershed Associations have had a lot of effort invested into them and not succeeded. So what contributes to some institutions succeeding and some not succeeding?
When we started in Gulbarga, where watersheds emerged, we started with Self-Help Groups first. And the Self-Help Groups, you had many in the watershed because they were poorer people up and mainly the poorer- the richer fellows were all in the cultivating at the bottom of the watershed. So when we went to organise the whole watershed, we brought the Self-Help Groups of the tribals at the poorer people who had lands on the upper watershed who are already functioning, with the richer people who had lands at the bottom of the watershed where the lands, in the valley, where the lands were good.
So after one day explaining to them in my broken Kannada with the help of translation why we wanted watersheds because, we wanted to make the water walk, and bring the soil back to life.
[ARCHIVAL AUDIO EXPLAINING THE WATERSHED PROGRAM]
From the ridge, you know the ridge is there in the valley, the water should not run. If it runs, what does it do? Washes the soil away. Who is the one really that is affected? The people with land on the upper reaches, their soil gets washed off. So I said, you must make the water walk.
Then I went to the centre and I called them all for a meeting and lunch. Then they sat down in front of me for discussion. I saw immediately that they sat like they owned land in the water shed – the richer farmers who cultivated land sat in front, the ones in the middle who were the poor ones were behind, and the tribals were on the top, were somewhere lost to the top. So it was reflected in the seating arrangement. Now, therefore the lower people, when I said make the water walk because I want the soil up there, they said, “No, we want the soil down, we want to harvest soil. We don’t want soil to be there, sorry.” So there was a conflicting issue. See, so we have to resolve all this. We did resolve it by showing them how if the water stays up, they have water in their wells for longer period of the year. If they are able to reforest all the watershed, they get more… . All this we had to show them, but it took some time. So there again as a Samaaj area. They were not a Saamaj, they sat in different groups.
Those Self-Help Groups however, when we then wanted to form affiliations, federations of groups, all the tribal groups federated from different watershed, they didn’t federate with these watershed but they kept their power, they began to be, “We’re independent.” Those watershed groups lasted for a very long time. What happened in other places? We had, Myrada had introduced the concept of the government giving money to the watershed group – not to Myrada, Myrada give the watershed – directly to watershed. I thought that in the Self-Help Group, Dr. Rangarajan, he was Deputy Governor of the Reserve Bank, he had given permission to the banks to lend to Self-Help Groups which were not registered because I had said that they don’t want to be registered because some petty government officer will harass them. He said, “They must keep accounts?” “Yes.” “They keep records?” “Yes.” So he told the banks, “Lend.” Banks said, “They’re not registered.” “Lend.” Now I assumed that this would happen with the watershed group. I was wrong.
Government is not the Reserve Bank. Government said, “No, we will not give money to the groups unless they are registered.” Now what was the result of that? That we have to form the watershed groups tomorrow, because the money had to come. We didn’t have the time to start the Self-Help Groups of the poorer people and all the rest of it, we had to start it tomorrow, otherwise no money could come. And therefore the watershed groups in most areas were government funded which were 80% of the project, were all, the as, were given to what watershed groups which were not really formed as associations. We didn’t give any much training, the poorer people had no say in the matter. But they worked in terms of planning and all that, they worked. But the poorer people did not get the benefit.
Like in our watersheds, Gulbarga, the question they asked was, “There are landless people in the village, watershed only benefits the landed people. What about the landless?” And they decided on their own that all the landless were in Self-Help Groups, they could take loan, they could buy cows and all the vacant fields in the watershed… . We have many absentee landlords. The Watershed Association signed an agreement with the absentee landlord and said we will cultivate trees on your land, the tree belongs to you, but the loppings will be given to the landless people to feed the cattle. See now this didn’t happen elsewhere, so there was no mutual support elsewhere. So the association didn’t last long, but they had a limited objective of contributing in planning the watershed, budgeting, and implementing. What I find now is many of them have broken down into Self-Help Groups, some have become Farmer Producer Organizations, some this, that and the other. But as Watershed Association they have not succeeded.
So what you are saying in effect is that unless you invest time in building them in a certain process, that the process is very important and that you cannot speed it up and you cannot circumvent processes in order to achieve your own agenda.
Yes, you see the other issue is this also – in the watershed you have…. . What was the role of the Watershed Association after the project? It was to make sure that the individual farmer maintained the structures. And it was to make sure that the larger structures like the dams were looked after by the Panchayat. Now, in many cases they did not work, Panchayat had no money so they couldn’t do it. But the small farmers, on their own, realising that there was value, were maintaining the farms without the Watershed Association insisting on it. So maybe we were expecting too much of the Watershed Association.
Yeah, yeah. Too much, too much, too soon. With too little resources, perhaps. Well let’s come to now you know a field that you have been also as closely associated with as natural resources and organisation building and all which is microfinance. Now there is a lot that you have talked about the Self-Help Group program, you have talked about the Bank Linkage program, you have been responsible for Sanghamithra Rural Financial Services, you have been associated with NABFINS as its Founder, Chief Executive. Now, at one time, the emphasis was on cutting edge interventions, innovations. I remember phrases like, “We should not be the only one, but we should be the best.” “Let a million Sanghamitras bloom,” and things like that. But those possibilities now somehow are disappearing. What is happening in the field of microfinance?
First and foremost, giving small loans did not start with what we call microfinance. The Government of India had several programs since the 60s which were giving small loans to agriculture. And the biggest one later was IRDP. So it’s not something new.
First was the Self-Help Group movement which started in Myrada in 84, 85, 86 and was accepted. And NABARD at that time and RBI were looking for an alternative to IRDP, where there were no subsidies – this was the biggest issue. It’s a non subsidised program and where the recovery would be much better.
In the late 80s… . First I should say thanks to NABARD and the Reserve Bank of India, between 87 and 91 they made various studies. They gave one million to Myrada and made various studies. And in 91-92 they decided to have a program called the Self-Help Group Bank Linkage Program where the bank would give a direct loan to the Self-Help Group, okay? Provided it kept accounts and… . So, there were 3 big changes that the RBI and NABARD made.
One was to lend to unregistered Self-Help Groups, because that was the first time. Second, was to give them a bulk loan and let the group decide how to lend. This cut down the work of the bank, the cost of the bank, we didn’t have to make just one loan. And third, no physical security but they were insured if they were animal husbands… . So this worked very well. But I realised that many areas the banks were not doing this. So that is why Sanghamitra started – to work in areas where the banks should not lending to the groups. And I said if the bank comes in we will withdraw. And we did this in Chitradurga when the bank came in – the good bankers – we said we will withdraw.
This was all very well 95-2000 and we had a social objective to help the poor in remote areas who were not getting bank loans. By 2000 this became well known and Sanghamitra was the, I think the first organisation to apply for this licence. But our licence was, you know what? So Sanghamitra cannot take deposits, cannot do this, cannot do this, cannot do this , cannot do this. Does not say what we can do because in ‘95 nobody knew what the hell you can do.
But by 2000 the Grameen Bank became known, and the Grameen Bank is a banking concept. It doesn’t require any change of policy. So, many people began following the Grameen Bank model of giving small loans. They also have groups, but the groups were more groups that ensured some kind of joint liability, though how it was done I am not too certain. There were no savings. The Self Help group started with their own savings because they have, and they were lending their own savings before the bank came in. Bangladesh had no savings till 1995, then they started savings. Then I realised one day I said, “But how did you build up savings so fast?”
You know what it was? It was compulsory saving. They were cutting off part of the loan and so much so by 2005, what they had saved compulsorily was enough to really manage their whole portfolio. So the poor had really lifted themselves up by their own bootstraps. It was their own money they were getting back. So, Self-Help Group was completely different from that. They manage their own money, the bank lent money to them at 10% interest, they added 1% or 2%. So they were lending at 12%, 13%, whereas, all these Grameen Bank and all were lending over 20%.
Now we began adopting that model of Grameen Bank. We adopted their software, we adopted, and the whole thing broke down into individuals. Sanghamitra was giving one loan to the group just like SHG Bank Linkage. Now came all this software where it was individual loans. So, we have things called Grading Organization Survey, Rating Organization, Common Assessors to see whether you are keeping these rules, otherwise you don’t get loans. Now they could not understand what is this loan to a group. So it had to be individual, otherwise your grade becomes low and you don’t get a loan. So the entire Grameen model was transferred into India and the Self-Help Group was pushed aside. And the Self-Help Group didn’t bring any money to Myrada. We trained the groups but the money remained with the group, whereas the Grameen model brought a lot of money to the people who started.
Grameen Bank today is a thorough profit making organisation. The founders says that it actually functions like a very full fledged profit making institution. That doesn’t mean they didn’t have an impact. It gave money to people working capital, this, I am not saying that but I’m saying that it runs like a professional bank. It makes profit and the people have pulled themselves up by their bootstraps, which is correct. That’s not the Self-Help Group movement. But today the whole microfinance in India has adopted that model which is a for-profit model. And unlike Grameen Bank which made some efforts to go on peeling the onion so that they went poorer and poorer, nobody is in India, no one is making that effort that I grant to you.
In India it is a purely profit and they are lending at 24%. Yesterday I found somewhere lending at 26%. How can people invest in any productive enterprise? So the problems now with the present model is one – they have, because there is no security, there is no physical security, the loans are all 35,000, average 35,000.
So what can you do with small loans? You can only, you cant even buy a cow for 35,000. Secondly, they are repaid after one month, you have to start repaying. Thirdly, there is no physical guarantee, so they charge high interest rates, 24%. How? What can you do? Which businessman will take a loan? Fourthly, there is no support after you give the loan to people who want to do something new. You lend and you get the money back.
So it, and they are all making profits. The salaries are high. Today, they have distorted the entire salary scale. You can’t get anybody today less than 5,00,000 per month. So I am not happy with the model.
So I want to introduce in this whole system, larger loans where people can invest in something productive. I want to introduce in this model that the repayment schedule should depend on the asset. For example, I have, in Sanghamitra now, we are lending to fishermen in Karwar.
Now one day they catch fish, some days they don’t catch. When they catch fish they want to return the money. We say, “No, no, no you cant return the money, you can only return so much.” Because this is how much is an EMI, we adopt the EMI. So we need to have a system where your recovery is based on this. Where we give people management support, technical support if required, after the loan and use your CSR for that. So it has to be tailor made. We need a software and I think we have, getting a software, it’s open source software to look at all this.
Now in order to push this, I have started one research program with Harvard Institute and Sanghamitra where we are experimenting with these new types of loans, larger loans, post loan support, no fixed repayment schedule. And we have on our own, we have also tried this thing. So this has to change to my mind.
For me, what I hear is that relationships have to dominate once again, not technology.
Yes relationships and customization. If you want to shift to this new customisation, you have to meet people. In our new model that we are adopting, we have, we go before the loan at least three times and assess the people, what are they doing, how their business is doing, how it’s working, all this. Like, for example, yesterday I had a meeting with my team and they said, “No Sir, we will postpone the loan of the hotel, because the road is just being made and he has… .” Now that is customised loan. That would not have appeared in our regular type of thing. So there is no customization today, it is all standardised loans, and it is fast. So there is a speed today, without consideration of the road being constructed or not. Because we are lending in the informal sector, it’s not organised. Ultimately, if you want to do microfinance, the cost of loan has to come down to 10%, not 25%.
So I want to conclude this with something again, you know, it goes back into the realm of civil society, if you call it that. But there is something that you have always talked about. You have talked about the fact that we are not working in isolation, we are part of a larger system. And this system includes the government as one of the major players in the field of development, it is the largest player in the field of development. So what you have said in the past has been for an organisation like Myrada or like Sanghamitra, civil society, not-profiting concerned about the poor, type of organisation is you work with the system wherever it is possible, you challenge the system wherever it is necessary, and you develop alternate systems where both working and challenging don’t…
I would look at Myrada as an actionist. I would call myself an actionist, not an activist. But the activists have a role. Not that they don’t have a role. If you just adopt confrontation attitude, doesn’t work with the government. You have to present an alternative and say give us a chance and if you are lucky you will get people in the government who would say yes. Myrada was lucky with the Self-Help Groups, we had Champions in the government. Myrada was lucky with Devadasis, we had champions in the government. Myrada was lucky with the HIV Aids program, we had champions in the government who supported us. So you have people in the government.
In the Self-Help Groups, it was P. R. Nayak, it was Dr. Rangarajan, it was Kotaiah and Nanda who support…
From NABARD and Reserve Bank of India.
In HIV-AIDS and Devadasis, it was all these women.
Women’s Development Corporation.
IAS officers from Karnataka. You know, I forgot their names, but Sobha Nambisan was one. Then there was another 2, 3 of them.
Anita, yeah. And Gurnani.
Yeah Vandana, Vandana Gurnani. Vandita Sharma was good.
Vandita Sharma was there also.
In all 3 cases, we had champions, they were all champions in the government. I am saying that there are less and less of champions in the government today. Nobody is willing to take any risk. So without that you cannot, you can do something on your own, but you are not going to be able to get it involved-
Influence policy, influence policy is no longer possible.
Very difficult, not no, it is very difficult. It could be here and there but it’s difficult.
I hope things will change in some way or the other, for the better. But there has to be leadership today in every Samaaj. Every Samaaj is lacking leadership.
Aloysius Fernandes, thank you very much for your time.
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