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Institutional Development as Establishing New Norms

Establishing the norm that development work can be recast sustainably

BASIX as a self-consciously normative organization has tried to work on changing the norms, or rules of the game, in the field of livelihood promotion. The very choice of BASIX legal and financial structure, partly inspired by Shore bank, USA, itself set a new norm in India: combining for-profit entities, a bank and an NBFC, for that part of the mission (financial services) which could be run on commercial lines, with a non-profit entity, for that part of the mission (research and development, capacity building, policy work) which serve the sector as a whole, both under a public purpose holding company.

Establishing the repayment norm among farmers

One persistent malaise in the rural credit sector in India was the persistent low repayments, whether in agricultural loans through cooperatives, or asset acquisition loans given under schemes like the IRDP in the 1980s. Thus when BASIX was established, one of its main institutional development tasks was to re-establish the repayment norm among rural poor borrowers. BASIX established new lending methods, which used a high degree of peer assessment for loan approval and used mutual or joint liability for ensuring repayment.