The paper traces the origin of the Centre for Agriculture and Rural Development (CARD), which was established in I986 and which focussed on livelihood and community assistance programs. Initially, it provided loans to community groups. However, poor performance led it to experiment with the Grameen model. Its performance improved and the it took several measures to better its services.
* Increase in the initial loan amount and introduction of new loan products.
* Raising the interest rates to a sustainable level.
* Increase in membership and borrowing to meet the credit demand.
However, in 1995-96 the organization faced several challenges.
* Grants were declining and the donor agencies wanted to deal with CARD only on a pilot basis.
* Large donor agencies were more inclined to work with formal microfinance institutions.
* There was increased pressure from different networks and from the board to embark on rapid expansion.
* There was apprehension that the Central Bank will ask NGOs to stop savings mobilisation.
With its track record of a good performance and challenge coping mechanisms, CARD decided to transform into a bank in 1997. It was helped by the liberalized banking regulations conducive to the establishment of a bank. This resulted in several advantages for the organization.
* Savings mobilization was intensified based on legal foundation.
* Commercial loan market was tapped.
* Staff gained enhanced banking and microfinance expertise.
* Procedures and operations were standardised.
* Compliance with regulations enhanced institutional health.
