of 15 members, who live close to each other in the same village.<sup>6</sup> Once the CO is formed, its members meet regularly to save, attend skill-training programs, and work collectively on local infrastructure projects.

NRSP also enhances the livelihood of CO members by offering microfinance services. Two-thirds of CO members are active borrowers. Microfinance is provided in the form of individual loans, usually with a single or monthly installments and a maturity of six to 12 months.<sup>7</sup> CO membership is a prerequisite to access these loans.

NRSP views microcredit and social mobilization as the main instruments to improve their livelihoods and empower communities. At the same time, the health of its microcredit program is also critical to NRSP’s financial sustainability.

NRSP’s dual focus on social mobilization and microcredit is reflected in its branch management structure. In each branch or Field Unit (FU), a Social Organizer (SO) oversees the social mobilization aspects of the program while a Credit Officer (CrO) is in charge of the microcredit program. Field Assistants (FAs), who are at the bottom of this hierarchy, report to the SO for social mobilization and to the CrO for all microcredit related issues. Both SO and CrO in all FUs are paid a flat wage that does not depend on the performance of FAs.

FAs are the institution’s front line staff that engage directly with local communities and CO members on a daily basis. They carry out all on-the-ground activities related to NRSP’s two goals. Given borrowers are also CO members, FAs carry out both types of credit and social related activities. Among the social-related activities, FAs facilitate the formation and management of COs, which includes attending CO meetings, ensuring that COs maintain adequate records of meetings, attendance and savings, and gathering requests by CO members for skill training. Among creditrelated activities, FAs screen loan applications and assess the creditworthiness of potential borrowers typically at the applicant’s home. FAs are also charged with ensuring timely loan repayment and visits to the home of delinquent borrowers.

According to the baseline survey, FAs reported that social activities not only improve the quality of COs, but they also affect credit-related outcomes. More than 90 percent of FAs said that regular and on-time CO meetings improved the creditworthiness of CO members (see Table 1). Similarly, credit activities, such as enforcing strict repayment and following up with borrowers at their homes, may also affect CO quality if such activities discouraged borrowers, especially those in arrears, from

> 6Depending on the local norms, CO members may be of the same or mixed gender.

> 7All loans are individual loans with no joint liability at the CO level. CO members are eligible to receive new loans even if some members from the CO have overdue amounts. Each borrower is however required to find two guarantors, who can be members of the same CO. NRSP uses these guarantors and other CO members to exert pressure on the defaulting borrower to repay. The loans can be used for the purchase of agricultural inputs, livestock, and investments in household enterprises. A new borrower starts with a maximum loan size of PKR 10,000, which can increase in intervals of up to PKR 5,000 with each successful loan cycle.

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