Providing credit is the primary goal of microfinance projects. But on its own this can be an ineffective response to chronic poverty. Research from India has shown that projects which take a broader approach can yield surprising results. A report from India's Utkal University describes the model of self-help groups used by the Centre for Youth and Social Development (CYSD). Questioning conventional wisdom in the microfinance industry, it argues that credit by itself will never lift marginalised women out of poverty. Financial services must be part of broad-based programmes that address a range of social needs. CYSD is a non-governmental organisation (NGO) based in Orissa, India's poorest state. It organises poor women into self-help groups of 15-25 members. They hold regular meetings at which every member contributes a savings deposit of an amount agreed by the group. When the savings have built up, members can borrow from this fund. All the decisions - the selection of borrowers, the amount of the loan, the rate of interest and repayment schedules - are decided by the group.CYSD's role is in the initial formation of the group and its ongoing facilitation. It helps with the development of financial management systems and conflict resolution procedures. The organisation also provides training in accounting, book-keeping, cash handling and the organisation of meetings. CYSD provides a link to banks and markets for the self-help groups. It encourages the formation of federations between the groups.CYSD differs from conventional microfinance organisations because:• It has a broader vision, seeing the self-help groups as vehicles for female empowerment, access to state services, participation by women in making decisions and local management of resources.• The groups are independent and their initial capital comes from the members rather than from outside.• In other peer-lending programmes, the microfinance organisation can often just use the group to avoid taking responsibility for the effectiveness of the initiative.CYSD works in isolated, rural communities where food security is an ongoing problem. The organisation has been more successful in reaching these communities than official programmes, which are often ineffective and corrupt. These initiatives have lead to changes in the status of the women involved within their communities. It has also changed the way resources are managed. Moreover, the communities have become more assertive in their dealings with the state and other organisations. They have submitted proposals to the local government administration, demanded public services to which they are entitled, successfully negotiated with subcontractors for a fairer amount from the lease of cashew plants and come up with innovative plans for regenerating degraded forest.The author suggests that the organisations involved in microcredit initiatives should take account of the fact that:• Credit is important for development but cannot by itself enable very poor women to overcome their poverty.• Making credit available to women does not automatically mean they have control over its use and over any income they might generate from microenterprises.• In situations of chronic poverty it is more important to provide saving services than to offer credit.• A useful indicator of the tangible impact of microcredit schemes is the number of additional proposals and demands presented by local villagers to public authorities.CYSD's approach is to encourage the women to realise that they may be vulnerable as individuals but collectively they can use their intelligence and creativity to solve their own problems. As a result their communities are no longer remaining silent in the face of the state's neglect but actively leading their own development.