Conduct adequate due diligence. ADB's policy framework was based largely on the recommendations of the high-level task force. Given the task force's expertise, there is merit to using such a report as the basis for ADB's program. Yet, ADB still needs to conduct adequate due diligence - specifically, how to implement and monitor the task force's recommendations and how to mitigate the facility's risks.Include systems for data collection. The program design could have benefited from a greater focus on data collection. Because data, particularly for district central cooperative banks and primary agriculture credit societies, was minimal at inception and still deficient at close, it is difficult to measure the program's impact. Better data could have supported program modifications, cancellation, or expansion. Practical steps that would have improved data collection would have been to (i) complete the special audit before the program's start, (ii) sequence computerization of the district central cooperative banks and eventually the primary agriculture credit societies (which was slotted toward the end of the program) at the beginning, (iii) fund the monitoring and data collection (that had been part of the cancelled accompanying TA) with internal staff consultancy or other resources rather than eliminate it from such a large loan program. Prove the concept before expanding. Although India wanted to introduce the reforms across the country simultaneously, another option would have been to pilot it in one or two states. If the pilot was successful, it would motivate subsequent participants, who would also be able to learn from the lessons of the pilot state(s). Moreover, ADB can add more value by concentrating its monitoring and support in one state than by spreading itself across a larger footprint. Plan realistic time frames. Despite 36 months of extensions, there remained unmet tranche release conditions. Even as of this project completion report 12 months after program cancellation, it is unclear when policy actions such as implementation of the action plan for ineligible PACSs and the computerization of the PACSs will be completed. Given the scope of reforms, the different governing layers, and the number of institutions involved, 42 months was not realistic. When targeting ambitious reform programs, longer time frames are necessary. Scheduling larger disbursements toward the end of the program can replace some of the momentum that the longer time frame will struggle to maintain.Design effective risk mitigation measures. ADB's risk assessment anticipated much of the program's eventual problems. However, the mitigating measures were inadequate to address the risks. More generally, given the size of the loan (which represented 58% of ADB's loan approvals for India in 2006), additional risk mitigation measures would have been appropriate and could have included piloting the program in one or two states prior to large-scale expansion, ADB participation in the National Implementation and Monitoring Committee, and a midterm program evaluation.Avoid tranche release conditions that require statutory changes. The program anticipated potential amendments to India's Banking Regulation Act, National Bank for Agriculture and Rural Development Act, and Deposit Insurance and Credit Guarantee Corporation Act as well as to states' cooperative societies acts. Remarkably, the participating states did all amend their cooperative societies acts. Still, ADB's programs should carefully assess relying on legislative actions, particularly at the national level, because its influence over the legislative process is likely limited. Moreover, in this particular program, the government was able to accomplish many of the intended changes through regulatory and executive actions, which suggests that additional due diligence could have a priori yielded alternatives to legislation.
Rural Cooperative Credit Restructuring and Development Program: Program Completion Report