1. Milaap Field Report – Gramalaya Urban and Rural Development Initiatives (GUARDIAN)
Tiruchirapalli – 20 March, 2010
The Milaap team made its first field trip to GUARDIAN at Tiruchirapalli, an MFI focused on water and
sanitation (watsan) financing. This is the first of the series of field reports that Milaap will prepare as a
part of the ongoing partnership visits.
The office GUARDIAN, located in a quiet neighbourhood at Trichy, brims with activity on a Saturday – loan
officers who come from the field with daily reports, people working on computers to update the
database, others addressing concerns of borrowers; the regular activities of a Microfinance Institution
(MFI). An MFI making to the headlines is hardly a surprise these days given the attention Indian MFIs have
been eliciting from investors and the media alike. However, GUARDIAN stands apart from the rest, it is
the only MFI in the country solely dedicated to water and sanitation (watsan). It may sound odd to many
at present but that is true for any innovation in its nascent stage.
Today, MFIs have created the first level of social innovation by establishing delivery channels for credit,
but social development goes beyond credit to other fundamental needs like education, health, water as
well. Developing robust delivery channels for these needs would entail another generation of social
innovation. No doubt, it would gain immensely from the MFI experience, but the focused approach to
each of the services is essential to devise sustainable mechanisms. We reckon, from that small office in
Trichy, GUARDIAN is scripting a very important chapter in social innovation. The title of it – Water &
Sanitation for All!
The Organisation
GUARDIAN was incorporated in 2007 to cater for
watsan financing in the region. “Though
Gramalaya has been involved in water
development for two decades, the specialized
requirements for watsan financing led to the
incorporation of a separate MFI in the form of
GUARDIAN”, says Mr. Paul Sathianathan, the
Executive Director of GUARDIAN is his neatly
arranged office.
Mr. Sathianathan has been leading GUARDIAN
for the past two years post a five year stint with
Gramalya. An ex-Government employee, Mr.
Sathianathan stresses on the importance of
developing financial products adapted to needs
of the borrowers. Getting the right repayment
period is even more critical as it depends on the
difficult variables time for construction of the
facility, income levels etc. Naturally, close
connect with the community is essential to
operations at GUARDIAN. Equally important is
training the people at GUARDAIN and the
organization has been sending its people to
leading MFIs like BASIX, Grammen Koota,
Bandhan. Over the two years, GUARDIAN has
created resources trained in field operations,
Field Research Report on GUARDIAN – written and compiled by Milaap Microfunds

2. loan process and management of back-end systems; all with a focus on watsan loans.
Processes at the back-end are being developed simultaneously. Detailed financial data, at the borrower
level, necessary not only to generate financial reports but also to monitor the entire business is being
managed by software provided by one of the best MFIs in the country. “We can generate reports as
required depending on the business scenario. For example, you can adjust the PAR values and check for
the risk associated with the portfolio or you could see the recoveries or group history”, says Mr. Senthil
Kumar, credit manager at the unit office, while enthusiastically explaining the features of the system.
The organization has gradually put the basics in place through small operations catering for nine blocks in
the Trichy district. Today, it understands the needs of the people, can design relevant financing structures,
has trained people and has systems to monitor and report – all ingredients in place for replicating and
scaling up.
Strong Connection with the Community
This report needs a special mention for Mr. Senthil and his colleage Mr. Selvan, who were with the Milaap
team throughout the day; explaining the operations, showing the systems, helping interact with credit
officers and finally accompanying to the
community visit to Gorimedu and
Wannarapettai, two nearby slum areas.
GUARDIAN has done extensive sanitation
financing programmes, of loan sizes of INR
10,000, in Gorimedu. The satisfaction of
people was evident in the warm reception
given to us by Janaki, the group leader of the
area. The presence of Mr. Senthil ensured an
easy interaction with most of the other
members, reflecting the high level of trust
GUARDIAN has developed over the years.
Janaki manages details of every loan in the
group – origination, disbursement, utilization
and repayment. A sense of pride beams across Janaki as she explains the book-keeping methods and
browses through separate files managed for each JLG. Mr. Selvan was there all the time – doing the
translations, taking to new borrowers, explaining how people have come up with solutions under
constraints. The urge amongst people to improve their lives was strong and it reflected in the
surroundings; that “slum” could easily be categorized as a developed colony in many of the Indian cities.
Standardisation is the key
The MFI industry in India has thrived under tough conditions – no credit information, illiteracy,
inaccessibility and a society resistant to change. Among the many social innovations this sector has
fostered, standardisation lies at the core of its success story. It’s entrenched in the very lifeline of an MFI –
the working of a loan officer, reporting, loan products, back-end systems, people management; it’s
omnipresent. Years of arduous efforts in standardization are at the root of rapid scale-up that has
catapulted this sector into mainstream investments.
This is exactly where GUARDIAN holds the promise. Over the years, the organization has gained
knowledge to standardize watsan loans and create a pool of trained staff. “People need to be educated
on need for clean water and sanitation. You need to be aware of their living conditions and needs before
pushing for a loan. Then processes and cross checks have to be strictly followed” says Ramya, one of the
credit officers, with a bubbly smile. Her training and experience in watsan requirements and knowledge of
Field Research Report on GUARDIAN – written and compiled by Milaap Microfunds

3. the processes evident in the discussion. Educating the community on sanitation requirements is essential
to generate demand for loans. Standardisation is hence essential to rapidly train the JLG members and
also assist them whenever required. Ramya remarks, “Initially, the first briefing, took nearly an hour and a
half; but now I can explain new JLGs everything in half the time because I know what’s most relevant to
them” – this learning curve is fundamental to achieve scale. Presence of trained staff at the ground level is
essential to manage cost of operations and eventually develop a
robust replicable business model.
It also helps GUARDIAN build the knowledge base to acclimatize
quickly to local conditions or assist its borrowers to think of
innovative solutions. For example, low pressure of water supply in
Wannarapettai, the second area of field visit, makes taps redundant
above the ground level.
The solution comes in the form of a concrete tank dug near the water
connection for every household. The connections are five feet below
the ground level with a concrete staircase leading to the base. The
structure acts an open storage tank as well. Even the people
constructing them are acquainted with the structure, leading to
reduction in planning time and eventually the costs. It immediately
translates to demand for more loans, proper utilization, faster
recovery periods and zero defaults for GUARDIAN.
The Story So Far
The Self Help Groups (SHGs) nurtured by Gramalaya formed the first consumer base for GUARDIAN. The
organization has started following the Joint Liability Group (JLG) model to scale up rapidly. Since it’s
inception in 2007, the cumulative disbursement has been approximately INR 54 million benefiting over
8000 borrowers of 1400 groups. Capacity building – training of staff, setting up IT systems and managing
the initial phase of operations, has been supported by Water.org. A credit facility of approximately INR 35
million from Indian Overseas Bank is the main source of funds.
Currently the loan programme has five loan products ranging from INR 3000, for water purifiers, to INR
10,000, for construction of sanitation facilities. It currently has three branches serving nine blocks of
Tiruchirapalli district. Till now GUARDIAN has controlled operations to a small scale and within a focus
area to learn and develop robust processes. The current interest rate of 18% diminishing is better than
industry standards and has contributed to consolidation of its member base. Steady source of funds is one
of the major requirements for the organization. “We have enough fund absorption capacity in the existing
unit offices. A steady flow of funds to essential to smoothen the lending process and that’s our top
priority for now. Initiatives like Milaap can really help us stabilize the fund flow and eventually expand to
other districts” marks Mr. Sathianathan. No doubt, innovative models take time to get attention of
bankers or investors. Hence, we at Milaap, were
convinced that organisations like GUARDIAN provide the
perfect scope utilizing retail capital for social innovation.
Water.org and World Water Day Celebrations
An eventful afternoon awaited us after a after a
sumptuous Chettinad lunch with the GUARDIAN team. For
the unfortunate, who callously limit the Tamil cuisine to
dosai, idli, vada and vada-sambar, Chettinad dishes will
come as a nice spicy surprise. Discussions with Mr.
Field Research Report on GUARDIAN – written and compiled by Milaap Microfunds

4. Damodaran, Country Director, and Mr. Jose, Manager of MFI Programmes, at the water.org office were
eye-openers on the number of different models that are being tried to help MFIs and NGOs build
sustainable watsan initiatives. Mr. Damodaran, a twenty year veteran in the social water sector and the
founder of Gramalya, heads water.org operations in India and has been instrumental in identifying
opportunities with big and small partners. The portfolio includes BASIX, BISWA, Grameen Koota,
GUARDIAN and many other NGOs. “We are aiming at best utilization of water.org funds and develop
funding programmes attuned to the requirements of the communities. We have specialists for watsan
loans of MFIs and revolving loan funds for NGO. The models are innovative and it will need patience. I am
happy that organization like Milaap is stepping forward to foster such grass root innovations”, remarks a
confident Damodaran, years of experience reflecting in the talk.
Participation in the Longest-toilet-queue initiative was
another remarkable event for the Milaap team.
Volunteers braved the heat to gather at the Cauvery
Bridge with immense enthusiasm. A gathering of five-
hundred people without clogging the road beside – the
discipline was exemplary. An equally disciplined
gathering in the local community hall marked the end of
the brilliant day. It also provided the opportunity to
interact with Arnie Heather, who leads the International
Programmes at water.org. Her international experience
and on her optimism with India, on harbingering the
social innovation in water and sanitation, were great to
know about.
The Milaap team thanks all involved for the fantastic day. It was visible to us that clean water and
sanitation has finally made beyond school text books and is well on its way to become a reality. Watch out
for GUARDIAN as it leads the change!
Field Research Report on GUARDIAN – written and compiled by Milaap Microfunds

5. Photographs from the filed trip
Mr. Damodaran, Country Director, Water.org Mr. Sathianathan, ED, GUARDIAN
Mr. Senthil & Mr. Selvan of GUARDIAN JLG operations explained to the Milaap team
One of the sanitation facilities in Gorimendu Water connection in Wannarapettai
Field Research Report on GUARDIAN – written and compiled by Milaap Microfunds

6. Water day celebrations – the longest toilet queue initiative
Field Research Report on GUARDIAN – written and compiled by Milaap Microfunds