File name: PKSF.Myanmar.

May 2013
Lecture by: Dr.Salehuddin Ahmed, Former Governor, Bangladesh Bank (entral Bank!,
Former "anaging Director o# $%SF, Bangladesh
"&'(')D&* A$)+ F,-D: $ALL& %A'"A.SA/A0A% F(,-DA*&(-
($%SF! &- BA-GLAD)S/
1.2 */) S)**&-G ,$ (F $%SF: */) (-*)+*
With the success of Grameen Bank’s ro!ram many "ar!e #G$s in Ban!"adesh introduced
microcredit ro!ram for their tar!et !rous. Sma""er #G$s fo""o%ed the same ath. But the sma""er
#G$s "acked ade&uate financia" suort for their microcredit ro!ram. 'o%e(er) there %ere not
many donors ready to come u %ith funds for microcredit ro!rams for these sma"") "oca""y *ased
#G$s. +t the same time) for those %hich recei(ed some suort there %as no !uarantee a*out the
continuity of donor funds. 'o%e(er) #G$s had !radua""y ac&uired some ski"" and or!ani,ationa"
stren!th to or!ani,e "oca" oor eo"e and to e-tend financia" ser(ices to them. .n this conte-t) the
!o(ernment of Ban!"adesh /G$B0 set u the Pa""i Karma Sahayak Foundation /PKSF0 in May 1110
/2ura" 3m"oyment Suort Foundation0 as an ae- or!ani,ation to ro(ide "oans to the #G$s %hich
in turn %ou"d ro(ide co""atera" free credit to their oor mem*ers and to ro(ide ad(isory ser(ices and
trainin! to #G$s for enhancin! their institutiona" caacity. PKSF) set u as a 4comany not for rofit5
*y the !o(ernment is uni&ue in its character and oerations.
3.2 "&SS&(- A-D (B4)*&5)S (F $%SF
PKSF %as set u in 1110 %ith an o(era"" o*6ecti(e of a""e(iatin! o(erty and imro(in! the &ua"ity of
"ife of the rura" oor 7 the "and"ess and the asset"ess eo"e *y ro(idin! them %ith resources for
creation of em"oyment for enhancin! economic conditions. 8he ma6or secific o*6ecti(es of PKSF
a0 to ro(ide (arious tyes of financia" he" and assistance to non:!o(ernment) semi:
!o(ernment) and !o(ernment or!ani,ations (o"untary a!encies and !rous) societies and
"oca" !o(ernment *odies) so that) as Partner $r!ani,ations /P$s0 and in consistence %ith
the PKSF’s ima!e and o*6ecti(es) they can undertake acti(ities %ith a (ie% to !eneratin!
income and em"oyment oortunities amon! the economica""y most disad(anta!ed
!rous in the society.
*0 to assist in stren!thenin! the institutiona" caacity of P$s) so that they can mana!e their
ro!ram in a sustaina*"e manner.
6.2 ($)'A*&(-AL S*'A*)G0 (F $%SF
8he ma6or o*6ecti(es of PKSF are9
a0 Financia" intermediation
*0 Market de(e"oment
8he *asic oerationa" strate!ies of PKSF ha(e *een dra%n from its o*6ecti(es9
a0 .t does not direct"y "end money to the "and"ess and the asset"ess eo"e rather reaches its
tar!et !rous throu!h its P$s) the de"i(ery mechanism for reachin! the oor.
*0 .t ro(ides !reater thrust to institutiona" de(e"oment.
c0 .t fa(ors no articu"ar mode") instead inno(ations and different aroaches *ased on
e-erience are encoura!ed.
7.2 L)GAL S*',*,') (F $%SF
;e!a""y PKSF is a 4comany "imited *y !uarantee5 meanin! 4comany not for rofit5 and is
re!istered under the <omanies +ct of 1113=111> %ith the 2e!istrar of ?oint Stock <omanies. 8he
"e!a" structure of PKSF a""o%s f"e-i*i"ity) authority and o%er to take ro!rams and im"ement them
throu!hout the country and mana!in! its affairs.
8.2 F,-D&-G (F $%SF
PKSF mandate authori,es PKSF mana!ement to mo*i"i,e funds in the forms of !rants) "oans and
contri*utions from a %ide (ariety of sources %hich inc"ude the Go(ernment of Ban!"adesh /G$B0)
ri(ate indi(idua"s and or!ani,ations) forei!n !o(ernments) internationa" donors and "endin! a!encies
and caita" markets.
So far PKSF has recei(ed funds from the !o(ernment of Ban!"adesh /G$B0) the .@+=Wor"d Bank)
AS+.@) +@B) .F+@) @F.@. Ku%ait Fund for +ra* 3conomic @e(e"oment /KF+3@0.
9.2 ('GA-&:A*&(-AL S*',*,') A-D ")"B)'S/&$
9.1 General Body
Ma-imum num*er of the mem*ers in the Genera" Body %i"" *e 2B) out of %hich !o(ernment may
nominate not more than 1B mem*ers from amon!st ersons associated %ith !o(ernment a!encies)
(o"untary or!ani,ations or ri(ate indi(idua"s. 8he remainin! 10 mem*ers may *e from amon!st
ersons reresentin! P$s and=or ri(ate indi(idua"s. 8he Genera" Body usua""y meets once a year for
o(era"" o"icy !uidance. Present"y) PKSF has a Genera" Body of 1C mem*ers consistin! of
distin!uished ersona"ities of the country.
9.3 Governing Body
8he comosition of the Go(ernin! Body is as fo""o%s9 /i0 <hairman of PKSF /nominated *y the
Go(ernment0) /ii0 the Mana!in! @irector /aointed *y the Go(ernin! Body0) /iii0 t%o mem*ers
nominated *y the Go(ernmentD and /i(0 three mem*ers e"ected *y the Genera" Body. 8hat Makes a E:
mem*er Go(ernin! Body of PKSF. 8he resent Go(ernin! Body comrises ersons of internationa"
reute inc"udin! Professor Mohammad Funus) Mana!in! @irector of Grameen Bank.
9.6 hairman
8he <hairman of PKSF is nominated *y the Go(ernment from ersons not in ser(ice of the 2eu*"ic)
usua""y for a term of three years.
9.7 "anaging Director
8he Mana!in! @irector is the <hief 3-ecuti(e $fficer /<3$0 of PKSF. 8he resent Mana!in!
@irector has *een aointed *y the Go(ernin! Body. 'e is the e-:officio mem*er of the Go(ernin!
9.8 "anagement
PKSF has four di(isions as fo""o%s9 a0 Sma"" and Medium P$s’ ;oan $erations @i(isionD *0 Bi!
P$s’ ;oan $erations @i(isionD c0 +dministration @i(isionD and d0 +udit @i(ision. ;oan $erations
@i(isions are the ro!ram di(isions of PKSF that se"ect P$s) dis*urse and reco(er "oan) monitor and
e(a"uate ro!rams and ro(ide on:site technica" assistance and ad(isory ser(ices to P$s. 8he interna"
audit di(ision reorts direct"y to the Mana!in! @irector.
PKSF has a sma"" research and a trainin! units to conduct research re"ated to o(erty a""e(iation and
to imart trainin! to the staff of P$s. 8hese units are under the +dministration @i(ision.
PKSF from its incetion has *een fo""o%in! a o"icy of recruitin! officers %ith hi!h academic
standin!. PKSF has Pro!rams to train its $fficers and Staff to increase their efficiency and ski"".
;.2 '(L) (F $%SF
+s an ae- financin! institution in(o"(ed in "on! term financin! of or!ani,ations %ith microfinance
ser(ices) PKSF uts utmost emhasis on attainment of *oth financia" and institutiona" sustaina*i"ity
*y these or!ani,ations. .n order to achie(e the o*6ecti(e of sustaina*i"ity. PKSF erforms the ma6or
functions e-ected of an ae- or!ani,ation. 8hese inc"ude) amon! others9
a0 Pro(ision of "oana*"e funds to MF.s
*0 @e(e"oin! *est ractices for microcredit mana!ement and oerations of MF.s
c0 .nstitution=caacity *ui"din! suort to MF.s
d0 ;o**yin! for aroriate o"icies and re!u"ations usefu" for the e-ansion of
microfinance sector
3ach of the functions are detai"ed *e"o%9
;.1 $rovision o# loanable #unds to "F&s
8he tota" num*ers of MF.s %hich are artner or!ani,ations /P$s0 of PKSF are 2E1. 8he si,es of P$s
ran!e from (ery *i! /B2+<) +S+0 to medium and sma"".
7.1.1 Features of PKSF Credit Program
a0 PKSF ro(ides "oans to t%o cate!ories of P$s: $r!ani,ations $eratin! in Sma"" +reas
/$$S+0 and Bi! Partner $r!ani,ations $eratin! in ;ar!e +reas /B.P$$;0.
*0 PKSF funds four cate!ories of microcredit ro!rams of its P$ under its mainstream credit
ro!ramD /i0 2ura" microcredit /ii0 Ar*an microcredit) /iii0 Microenterrise creditD and /i(0
hardcore oor microcredit.
c0 PKSF char!es >.BG ser(ice char!e er year from its $$S+ cate!ory P$s and EG ser(ice
char!e er year from its B.P$$; cate!ory P$s.
d0 ;oan recei(ed *y $$S+ cate!ory P$s from PKSF are reaya*"e %ithin a eriod of 3
years. First C months are considered as a !race eriod and "oans a"on! %ith ser(ice char!e
are to *e reaid in 10 &uarter"y insta""ments %ithin the rest 30 months.
e0 ;oans recei(ed *y B.P$$; cate!ory P$s are aya*"e in > years in 12 e&ua" insta""ments
%ith a !race eriod of 12 months.
7.1.2 Implementation of Credit Program
a0 +"ication in rescri*ed form9
PKSF recei(es a"ication for "oan in a rescri*ed a"ication form that re&uires the
a"icant:or!ani,ation to inc"ude detai"s of information a*out the or!ani,ation) its
ro!ram) its financin!) etc.
*0 Pre"iminary araisa"9
.f an or!ani,ation has e-erience of mana!in! credit ro!ram for the oor) PKSF
re"iminari"y se"ects it for fie"d (isit to see if a"" information ro(ided *y the or!ani,ation
is consistent. PKSF 6ud!es e-erience in rura" credit ro!ram usin! se(era" criteria9 /a0
num*er of years of e-erience) /*0 amount of "oan dis*ursed) /c0 num*er of mem*ers and
*orro%ers) /d0 reco(ery rate of "oan) /e0 ade&uacy of ski""ed sa"aried staff and /f0
credi*i"ity of sonsors.
c0 Fie"d (isit9
$nce an or!ani,ation is se"ected for fie"d (isit) an officer (isits the or!ani,ation. .f the
erformance of the or!ani,ation is found satisfactory it is recommended for accetance as
P$. .f there is some deficiency) the concerned or!ani,ation is ket under o*ser(ation and
su!!estions are !i(en for imro(in! the erformance. $n the other hand) if erformance
of an or!ani,ation is found unsatisfactory) the a"ication is re6ected. Asua""y) the main
reasons for re6ection are the financia" mismana!ement) !ross inconsistency *et%een
information in the a"ication and that !athered from fie"d (erification.
d0 +ro(a" *y the Go(ernin! Body9
8he fina" o%er of accetin! an or!ani,ation as a P$ rests %ith the Go(ernin! Body. .f
the mana!ement considers an or!ani,ation to *e acceted as P$) the roosa" is "aced
%ith detai"ed descrition of the or!ani,ation a"on! %ith the fie"d reort) rationa"e for
accetin! it as P$ and recommendation of the M@) in a meetin! of the Go(ernin! Body.
8he Go(ernin! Body after de"i*eration accets or re6ects or uts certain conditions for
accetin! the or!ani,ation as a P$.
e0 Si!nin! of ;oan +!reement9
/a0 Fina" ste in dis*ursin! "oan to the ne%"y se"ected P$ is the si!nin! of a standard "oan
a!reement %ith P$. 8he "oan a!reement contains terms and conditions of "oan /e.!. rate
of ser(ice char!e) area of "oan dis*ursement) num*er of insta""ments etc.0. 8he "oan is
co""atera" free. .n addition to a "oan a!reement) a romissory note is si!ned *y the
reresentati(e of the P$. /*0 8he "oan a!reement is si!ned from PKSFHs side *y the
Mana!in! @irector and from P$’s side *y the <hief 3-ecuti(e of the P$ or sometimes
6oint"y *y the <hief 3-ecuti(e and the <hairman.
f0 Ierification of ;oan Ati"i,ation9
+fter the first "oan is !i(en) the P$ is suosed to dis*urse the "oan immediate"y after
recei(in! the fund and !i(e a "ist of *orro%ers to PKSF. +n officer from PKSF in char!e
of the P$ (isits the P$ to (erify the "oan dis*ursement and uti"i,ation of "oan *y the
mem*ers. Asua""y) PKSF officia"s (isit the P$s at an inter(a" of 3 months.
!0 +"ication for Successi(e ;oans9
8he aro(a" of successi(e "oans to a P$ deends on se(era" factors9 /a0 satisfactory
uti"i,ation of re(ious "oan) /*0 maintainin! hi!h rate of reco(ery of "oan at the fie"d "e(e"
/J1KG0D /c0 !i(in! reorts re!u"ar"y to the PKSF) /d0 otentia" for e-ansion of "oan
ro!ramD and /e0 reayment of "oan insta""ments to PKSF) if due. 8he successi(e "oan
roosa"s uto 8aka 2.B mi""ion are aro(ed *y the ;oan <ommittee chaired *y the
Mana!in! @irector. Simi"ar "oan a!reement is si!ned for each insta""ment of "oan. ;oan
*eyond 8k. 2.B mi""ion "imit is aro(ed *y the Go(ernin! Body.
h0 Pre:PKSF Partner9
2ecent"y PKSF has taken a decision to se"ect those #G$s %hich ha(e otentia"s for
*ecomin! PKSF fu"" artners *ut cannot meet the criteria for this. PKSF ro(ides sma""
microcredit funds to these #G$s and !i(e technica" assistance to *ui"d their caacity to
make them fu"":artners e(entua""y.
;.1.6 Performance of Credit Program
PKSF’s 2E1 P$s are disersed a"" o(er the country co(erin! a"" C> districts of Ban!"adesh.
Loan Disbursement
PKSF in its first year of oerations in 1110 cou"d dis*urse on"y ASL B0)000. 8hat %as the
rearatory year for formu"atin! o"icies and a eriod of "earnin! to dis*urse "oan to institutions. A
to ?une 2012) it has dis*ursed ASL 1EC0 mi""ion.
Loan Outstanding
PKSF has ASL >30 mi""ion "oan outstandin! %ith P$s as of ?une 2012. 8his does not inc"ude
institutiona" de(e"oment /.@0 "oan !i(en *y PKSF to its P$s.
+s of ?une 2012) tota" num*er of *orro%ers financed *y PKSF fund %as C.CB mi""ion of %hom more
than 10G %ere %omen.
"eco#er$ of Loan
PKSF has t%o different reco(ery rates9 /a0 reco(ery rate of "oan *et%een the P$ and PKSF) and /*0
reco(ery rate of P$s. 2eco(ery rate of PKSF is a*o(e 1KG. 8his rate is defined as the ercenta!e of
due amount has *een recei(ed on time. ;oan reco(ery of P$s at the fie"d "e(e" is around 1KG.
;.3 Develo<ing best <ractices #or microcredit management and o<erations o# "F&s
PKSF re(ie%s its o"icies and ro!rams continuous"y and ad6usts them to meet the chan!in!
re&uirements. PKSF in the "ast decade has reared a num*er of o"icy !uide"ines and standards for
the microcredit sector *ased on the fe"t needs in(o"(in! the ractitioners : PKSF staff mem*ers and
P$s reresentati(es and officia"s. PKSF has a ro!ram to de(e"o standards in further areas and
re(ie% and re(ise ones a"ready reared. Ma6or o"icy !uide"ines and standards reared *y PKSF
1. Statement of Polic$: Guide"ine for se"ection of P$s and Borro%ers for 2ura") Ar*an)
'ardcore oor and Microenterrise.
3. %uideline for &ccounts: PKSF fo""o%s accrua" *asis of accountin! a"on!%ith dou*"e entry
system for keein! *ooks of accounts. For P$s PKSF has a Fund Mana!ement Manua" %hich !i(es
rocedures to kee records of accounts at fie"d and head office "e(e". 8here shou"d *e a fire%a""
*oundary to a""ocate shared costs or re(enues *et%een financia") non financia" or socia" ser(ices and
commercia" acti(ities. 3-enses re"ated to actua" or anticiated "oan "osses shou"d *e sho%n
searate"y from other e-enses in the income statement. 2e(enue from donations shou"d *e sho%n
searate"y from income !enerated *y an MF.s financia" ser(ices and commercia" acti(ities.
6. Polic$ for Loan Classification and Debt 'anagement "eser#e: ;oan outstandin! amon!
*eneficiaries or ortfo"io is the imortant asset of an MF.. @ue to (arious reasons it may not *e
ossi*"e to reco(er some "oans in fu"" amount. 8he core fund of any P$ for microcredit %ou"d *e
eroded if it does not consider this henomenon and fai"s to create ade&uate M@e*t Mana!ement
2eser(e5. .f the &ua"itati(e asect of ortfo"io on a continuous *asis are c"assified roer"y) it he"s to
create necessary reser(e a!ainst dou*tfu" and *ad "oan in a rudent manner. 8hrou!h ro(isionin!)
MF. reco!ni,es the "osses it can reasona*"y e-ect to ha(e in its ortfo"io.
7. %uidelines for Designing Internal Control S$stem for POs of PKSF: 8his !uide"ine he"s to
stren!then and in *ui"t %ithin the or!ano!ram) systems of accounta*i"ity a"on!%ith re(ention of
errors and irre!u"arities.
8. 'anagement of Sa#ings: 8his o"icy ro(ides a detai"ed !uide"ine on marketa*"e sa(in!s
roducts and associated record keein! system a"on! %ith direction for usin! sa(in!s fund %ith a
(ie% to ensure rotection of deositors.
9. %uideline for 'anagement of Ser#ice C(arge )arnings: 8his !i(es o"icy !uide"ines for
a""ocatin! ser(ice char!e earnin!s to oerationa" cost comonents of different cate!ories inc"udin!
"oan "oss ro(ision) disaster mana!ement fund and caita" ac&uisition fund so that ma-imum amount
of sur"us can *e !enerated for increasin! P$s e&uity *ase.
;. %uideline for &#oiding O#erlapping: When a househo"d recei(es microcredit from more than
one MF.) this %i"" *e treated as an instance of o(er"ain!. +dotion of o(er"ain! o"icy %i"" he"
in miti!atin! the emer!in! ro*"em of o(er"ain! at fie"d "e(e".
=. 'anagement Information S$stem *'IS+: Formats used for in:house reortin! of fie"d "e(e"
acti(ities and for reortin! to PKSF ro(ide a !ood *asis for ana"y,in! ortfo"io &ua"ity of M<P. P$s
use these formats for reortin! to PKSF on a month"y *asis. Some of the donors has acceted the
PKSFs reortin! format for their o%n funded acti(ities. Aniform reortin! sa(es time for MF.s.
>. %uideline for Performance Standards and categori,ation of POs: PKSF has set u
erformance standards for its P$s in re"ation to (arious asects of microcredit mana!ement) o(era""
institutiona" stren!th and fund a*sortion caacity of P$s and to cate!ori,e P$s under different
!rades) %hich is used as in house e(a"uation for credit ratin! of P$ *efore any further dis*ursement.
12. Financial "atio &nal$sis: PKSF has de(e"oed a ro!ram for financia" ratio ana"ysis
co(erin! the fo""o%in! areas9 /a0 effecti(e financia" structure /*0 ortfo"io &ua"ity /c0 se"f:sufficiency
/d0 oeratin! efficiency /e0 rates of return and cost) and /f0 !ro%th. Financia" ana"ysis a""o%s MF.
mana!ement to identify stren!ths and %eaknesses in their microfinance ser(ices and ro(ides a *asis
for *usiness "annin! and ro6ections.
11. Polic$ for t(e -tili,ation of Disaster 'anagement Fund: PKSF has ro(ided 8k10m to its
P$s as !rant for creation of a @isaster Mana!ement Fund /@MF0 *y each P$. 3ach P$ %i""
contri*ute a ortion of their ser(ice char!e earnin!s to this fund fo""o%in! @MF o"icy de(e"oed *y
PKSF. 8his fund %i"" *e used for stren!thenin! the disaster coin! a*i"ity of microcredit c"ients
throu!h interest free "oans fo""o%in! @MF o"icy !uide"ines of PKSF.
13. Indicators of )arl$ .arning S$stem: PKSF has set u a o"icy to detect do%n%ard trend in
M<P throu!h some indicators and to take re(enti(e measures sooner.
16. usiness Plan for POs: .n order to im"ement an effecti(e and sustaina*"e M<P) the P$s are
re&uired to ha(e a fi(e:year *usiness "an. 8he !uide"ine are in t%o arts. 8he first art is to reare
an e-ansion "an /hori,onta" N (ertica"0 and the ne-t is to formu"ate some institutiona" de(e"oment
strate!ies for im"ementin! the a*o(e "an ha(in! considered the e-istin! stren!th and %eakness of
the or!ani,ation. Both of them ha(e tar!ets that %ou"d *e annua""y im"emented.
17. %uideline for 'anagement &udit: 8his is a o"icy !uide"ine to e(a"uate the interna"
!o(ernance) accounta*i"ity) transarency and reortin! of P$ throu!h assessment &uestionnaires.
18. %uidelines for Internal &udit: 2i!orous mana!ement and financia" audits are carried out *y
interna" audit ce"" of PKSF for each P$. +t "east B fie"d (isits are made in a year for each P$ for this
urose. + comrehensi(e interna" audit 8erms of 2eference /8$20 is fo""o%ed in this re!ard.
19. &udit /O" for e0ternal auditor of PKSF for auditing PKSF
1;. &udit /O" for e0ternal auditor of PKSF for auditing its POs: +t resent e-terna" auditors)
sha"" audit EBG of PKSF P$s durin! e-terna" audit of PKSF) in future this %i"" *e 100G. +
comrehensi(e 8$2 is there to fo""o% uniform auditin! and reortin! standard.
1=. &udit /O" for auditors appointed b$ POs: For uniformity of accountin! and reortin!
standard PKSF has !i(en a 8$2 for e-terna" auditor of P$s aointed *y them.
11. Polic$ for loans for institutional de#elopment.
22. PKSF microcredit program funding polic$ for indigenous et(nic minorities.
;.6 &nstitution?ca<acity building su<<ort to "F&s
.nstitutiona" de(e"oment /.@0 of PKSF and its P$s ho"ds !reat imortance esecia""y from the oint
of (ie% of sustaina*i"ity of the microcredit ro!ram that has so far *een oerationa" so successfu""y in
Ban!"adesh. .nstitutiona" de(e"oment has im"ications on a num*er of areas comrisin! ro!ram
outreach) a*sortion caacity of the MF.s) suer(ision and monitorin!) financia" mana!ement and
contro") ersonne" o"icy inc"udin! human resource de(e"oment /'2@0) sustaina*i"ity of micro:
credit ro!ram and MF. itse"f etc. 8he institutiona" de(e"oment comonents inc"ude trainin!) on:site
technica" assistance) .@ "oan ro!ram) %orksho= seminars and research ro!ram.
7.3.1 /raining4
8rainin! for P$s ersonne" has *een identified as one of the (ita" acti(ities of PKSF for enhancin!
institutiona" caacity for successfu" mana!ement of microcredit ro!ram. 8o im"ement the trainin!
ro!ram PKSF has created a 8rainin! Anit headed *y Genera" Mana!er +dministration. 8he unit is
suorted *y a se(en mem*er .m"ementation 8eam /.80 consistin! of senior "e(e" staff mem*ers.
8he Mana!er and t%o +ssistant Mana!ers carry out the routine %orks of the unit. PKSF has identified
some 8rainin! institutes *e"on!in! to *oth u*"ic and ri(ate sectors and out:sources its trainin!
ro!rams to these institutes fo""o%in! the trainin! "an incororated in the year"y trainin! ca"endar.
/raining 5eed &ssessment4
+ trainin! need assessment /8#+0 %as undertaken to desi!n trainin! modu"es for P$s and PKSF
staff. Based on the 8#+) PKSF de(e"oed 11 trainin! modu"es out of %hich E are for PKSF staff and
1B for P$s’ staff.
Training Modules for POs Staff
Categor$ of
'odules Duration of
training courses
<hief 3-ecuti(es 10 Financia" Mana!ement
20 Sa(in!s +nd <redit Mana!ement
30 Monitorin! N 3(a"uation
>0 Strate!ic P"annin!
B0 Good Go(ernance
3 days
3 days
3 days
> days
2 days
Mid ;e(e" $fficers 10 +ccounts Keein! and Financia" Mana!ement
20 <redit $eration and Sa(in!s Mana!ement
30 Suer(ision N Monitorin!
>0 8rainin! of 8rainers
B0 @isaster Mana!ement
C0 Microenterrise
3 days
B days
3 days
E days
2 days
3 days
+ccountants 10 +ccounts:Keein!
20 Financia" Mana!ement
B days
3 days
Fie"d Workers 10 Grou @ynamics) Micro <redit N Sa(in!s
20 3ffecti(e Mana!ement of .G+Hs
3 days
3 days
8ota" 1B
Training Modules for PKSF Staff
Categor$ of /rainees 'odules Duration of training
+ssistant Genera" Mana!er)
@euty Genera" Mana!er
10 Financia" Mana!ement
20 Strate!ic P"annin!
30 Monitorin! and 3(a"uation
B @+FS
B @+FS
B @+FS
Categor$ of /rainees 'odules Duration of training
Mana!er) @euty Mana!er
+nd +sst. Mana!er
10 Financia" Mana!ement
20 Micro:<redit Mana!ement
30 Bud!etin! and +uditin!
>0 .dentification and Mana!in! .G+Hs.
E @+FS
B @+FS
B @+FS
3 @+FS
8ota" E
+ ne% dimension in the trainin! ro!ram has *een added introducin! on the sot trainin! /&uick)
need:*ased) in:situ0 for the P$s staff.
7.3.2 On6site /ec(nical &ssistance4
PKSF officers) %hen they make fie"d (isits for on:site monitorin! of P$s’ ro!rams) ro(ide the P$s
ad(ice on different asects of mana!ement and oerations of their microfinance
ro!rams. 8his on:site technica" assistance has *een found (ery effecti(e in
imro(in! the efficiency of P$s’ ro!rams.
7.3.3 Institutional De#elopment Loan Program4
PKSF is im"ementin! a "oan ro!ram for its P$s institutiona" de(e"oment since 111E. Since FF
2000:2001 PKSF has introduced 1G interest to this "oan ro!ram. Pro(ides "oans to its P$s to make
office:cum:trainin! centresD Buy <omuters) Motor <yc"es) By:<yc"es) 3n!ine Boats) and
Photocoiers. 8his "oan is reaya*"e in t%o years in ei!ht e&ua" insta""ments.
7.3.7 .or8s(ops9Seminars4
PKSF or!ani,e a series of %orkshos on 4Stren!thenin! Microcredit $eration5 of its Partner
$r!ani,ations /P$s0.
7.3.: "esearc( Program4
PKSF !i(es much imortance to research for institutiona" de(e"oment. 8he o*6ecti(e of research
ro!ram is to stren!then and suort the microcredit ro!ram of PKSF and its P$s.
;.7 Lobbying #or a<<ro<riate <olicies and regulations use#ul #or the e@<ansion o#
micro#inance sector
PKSF "o**ies %ith the Go(ernment for aroriate o"icies and re!u"ation. 8he Go(ernment has
constituted a committee to reare a re!u"atory frame%ork for the country’s microcredit sector. PKSF
is an imortant mem*er of this committee and makin! contri*ution to he" the Go(ernment reare a
microfinance friend *y re!u"atory frame%ork.
Ot(er &reas of Contribution
Besides the a*o(e) PKSF is a"so makin! contri*ution in the fo""o%in! areas9
i0 Computeri,ation of PO;s 'IS and &ccounts S$stem: PKSF has de(e"oed soft%are for P$
M.S usin! orac"e and @e(e"oer 2000. 8he soft%are has *een tested in B P$s and %i"" *e
im"emented in a"" P$s soon. PKSF is a"so de(e"oin! soft%are for P$s’ +ccounts.
ii0 Credit ureau Database: PKSF has taken u a ro6ect to set u a <redit Bureau @ata*ase at
PKSF. 8he data*ase %i"" ha(e information u to the *orro%ers "e(e" of a"" microcredit
or!ani,ations of the country inc"udin! PKSF P$s and Grameen Bank. 8he data %i"" *e ket at
a disa!!re!ated "e(e" "ike union=(i""a!e) %hich may *e used to identify areas in terms of
intensity of microcredit ro!ram co(era!e.
iii0 Disaster Coping Strateg$: PKSF has ro(ided 8k. 10 mi""ion to its P$s as !rant for creation
of a @isaster Mana!ement Fund /@MF0 *y each P$. 3ach P$ contri*utes a ortion of their
ser(ice char!e earnin!s to this fund fo""o%in! @MF o"icy de(e"oed *y PKSF. 8his fund is
to *e used for stren!thenin! the disaster coin! a*i"ity of microcredit c"ients throu!h interest
free "oans fo""o%in! @MF o"icy !uide"ines of PKSF
i(0 PKSF and %ender )<ualit$: PKSF since its (ery incetion reco!ni,ed the fact that %ithout
the acti(e articiation of %omen %ho estimate B0G of the countryHs ou"ation) microcredit
ro!ram %ou"d not *e a*"e to achie(e its o*6ecti(es. S$) PKSF encoura!ed its artners to
tar!et their microcredit ro!rams to inc"ude main"y the %omen. 8o day) more than 10G of the
*eneficiaries of microcredit ro!rams of its artners are %omen. PKSF is therefore "ayin! an
imortant ro"e in emo%erment of %omen.
(0 %O65%O Partners(ip: PKSF has (ery successfu""y esta*"ished and de(e"oed G$:#G$
co""a*oration in the fie"d of o(erty a""e(iation throu!h the ro(ision of microcredit.
=.2 S,S*A&-AB&L&*0 (F $%SF
PKSF has achie(ed oerationa" and financia" sustaina*i"ity. .t can co(er its direct costs of oerations)
such as sa"aries and administration costs) throu!h its interest earnin!s. PKSF’s interest income from
"oans *oth ensures oerationa" sustaina*i"ity and co(ers *ad de*t e-enses and financia" e-enses
incurred in makin! "oans and thus it is financia""y sustaina*"e. With oerationa" and financia"
sustaina*i"ity a"ready achie(ed PKSF is committed to attain economic (ia*i"ity.
PKSF has a"so achie(ed institutiona" sustaina*i"ity. PKSF has a %e"" defined) hi!h"y transarent and
roacti(e !o(ernance system. .ts !o(ernin! *ody inc"udes ersons %ith internationa" reutation in the
fie"d of rura" de(e"oment) o(erty a""e(iation and microcredit. .ts mana!ement cadre consists of
indi(idua"s ha(in! distincti(e academic record and hi!h de!ree of rofessiona" efficiency and
commitment. #o indi(idua" or erson dominates PKSF o"icy or mana!ement. +"thou!h it is created
*y the Go(ernment and funded *y and throu!h the Go(ernment it en6oys oerationa" autonomy. +""
these factors ha(e contri*uted to PKSF’s institutiona" sustaina*i"ity.
>.2 S,S*A&-AB&L&*0 (F $(S
Fundamenta" o"icies to run a successfu" rura" credit ro!ram are in "ace in many P$s. Se"ection of
mem*ers) sa(in!s and "oan o"icies) ortfo"io mana!ement) financia" contro") and monitorin! and
e(a"uation are some of the fundamenta" areas of o"icy formu"ation.
So far) many P$s %ithin their "imited caacity ha(e tried to recruit cometent staff. P$s do not ha(e
ade&uate financia" resources to recruit staff %ith *etter educationa" attainment and cometence. Many
P$s are *ein! mana!ed *y their founders and e-ected to do so for &uite some time. ;eadershi *y
the resent directors at this ear"y sta!e of the or!ani,ation is imortant for !ro%th and sustaina*i"ity.
Many P$s either ha(e hysica" assets "ike office *ui"din!s and "and or urchased "and for construction
of office) trainin! center) etc. 8his sho%s a c"ear commitment from the art of the or!ani,ers for
!i(in! P$s a so"id foundation.
8he *asic issue in financia" (ia*i"ity ana"ysis is %hether P$s can co(er the costs of mana!in! their
credit ro!rams from the income of the ro!rams) main"y the ser(ice char!e from "oans. Some P$s
ha(e *een successfu" *y !radua""y co(erin! the cost of oerations from the income of the credit
ro!ram and !eneratin! a moderate sur"us. .t is e-ected that a"" P$s %i"" continue to imro(e their
12.2 &"$A* (F $%SF "&'(')D&* $'(G'A"
=ig(lig(ts from t(e IDS Stud$ on PKSF>s 'onitoring and )#aluation S$stem
+n e-tensi(e fie"d research conducted *y the Ban!"adesh .nstitute of @e(e"oment Study /B.@S0 in
2003:> finds that the microcredit ro!ram of PKSF im"emented throu!h its P$s has *enefited the
rura" oor in numerous %ays. 8he ro!ram has si!nificant"y increased incomes of the oor imro(ed
their standard of "i(in!) and contri*uted to their socia" de(e"oment and) emo%erment.
+ccordin! to the Study) the microcredit ro!ram has suorted numerous income:!eneratin!
acti(ities and has contri*uted immense"y to%ards romotin! se"f:em"oyment acti(ities. .t is the area
of transortation=transort ser(ices %here the ro!ram has made most si!nificant contri*ution.
8he study finds) (ery c"ose association *et%een ro!ram articiation and en!a!ement in non:farm
acti(ities. .ncreased access to the credit market due to ro(isionin! of MF. "oans) rura" oor no%
ha(e !reater access to other markets for economic sustenance. 8his !ets ref"ected in !reater
in(o"(ement of ro!ram articiants in the "and /renta" or mort!a!e0 market) and a !reater access to
the informa" credit market /such as nei!h*ors0 for the re!u"ar articiants amon! the oor househo"ds.
8heir deendence on money"enders has a"so dec"ined.
8here is a"so a si!nificant ositi(e effect of re!u"ar ro!ram articiation on income and on a(era!e
consumtion of oor househo"ds. Particu"ar"y) increase in the consumtion of u"se) fish and mi"k.
8here is a"so some indication that a(era!e consumtion tends to rise %ith increase in the "en!th of
mem*ershi. 8he study a"so finds that the increase in income of re!u"ar articiants durin! the f"ood
year %as hi!her than a"" other sam"e !rous) e-cet the ne% articiants.
+ccordin! to the study) the ost:f"ood reco(ery %as remarka*"y &uick) sho%in! resi"ience caacity of
the oor rura" househo"ds of Ban!"adesh. +na"ysis of the study resu"ts sho%s noticea*"e imact of
ro!ram articiation in rotectin! from such natura" ca"amities=shocks.
.mro(ed economic %e"" *ein! due to ro!ram articiation has contri*uted to reduction of househo"d
"e(e" (u"nera*i"ity. 8he articiant househo"ds %ere "ess (u"nera*"e concernin! hea"th crisis) "ar!e
e-enses and (io"ence. Pro!ram articiants tend to resort to soft otions) such as) *orro%in! at ,ero
or "o% interest rates) and throu!h mo*i"i,in! materia" and mora" suort from atrons and kinshi
+n imortant source of economic crisis faced *y the rura" househo"ds is rooted in the seasona"
(ariation of em"oyment and income. 8he study finds that the ro!ram articiation amon! oor
househo"ds "eads to mi-in! of non:farm se"f:em"oyed acti(ities) %hich reduces seasona" (ariation in
tota" em"oyment and income. Genera""y) the study finds ro!ram articiants to *e "ess (u"nera*"e to
crisis e(en thou!h they face simi"ar de!ree of crisis as non:articiants.
8he study finds !enera" imro(ements in "i(in! standards of a"" sam"e househo"ds. $ne e-am"e is
the dec"ine in the use of oen sace *y the adu"ts for the toi"et urose :the dec"ine *ein! "ar!est for
occasiona" and re!u"ar articiants. Simi"ar"y) access for chi"d immuni,ation imro(ed for a"")
ho%e(er) the !ender !a for *oth @P8 and Meas"es (accination reduced re"ati(e"y more amon!
chi"dren in re!u"ar articiants.
+ccess to other modern hea"th care faci"ities such as contracetion re(a"ence increased for a"" and
the increase in such access %as hi!her amon! the re!u"ar articiants. $ne interestin! findin!s from
the sur(ey is the dec"ine in re"iance on fema"e method) %hich is more (isi*"e amon! the re!u"ar
2esu"t of the study sho%s that articiation in MF. ro!ram in !enera") and re!u"ar articiation in
articu"ar) had ositi(e effect on househo"d resource a""ocation on house reair) schoo"in! and hea"th
care. +"" these had imro(ed the socia" %e"" *ein! of the articiant househo"ds more then the non:
articiants. More imortant"y) articiation in MF. ro!rams "ed to dec"ine in !ender !a in access to
schoo"in! and to modern hea"th care.
.ncrease in access to credit has !enera""y *enefited rura" %omen throu!h increased access to markets)
financia" institutions) and ser(ice ro(iders and to information and kno%"ed!e. 'o%e(er) articiation
had "itt"e effect on %omenHs access to "a*or market) %hich ref"ects inf"e-i*i"ity in certain socia" and
cu"tura" norms) %hich are yet to *e remo(ed from the rura" society. 8he most (isi*"e ositi(e effect of
articiation on %omenHs re"ati(e osition has *een %ith resect to decision makin! on househo"d
e-enditure and ferti"ity re!u"ation. 8he study a"so sho%s that %omenHs access to househo"d income
has increased and their status in the fami"y has imro(ed. $(era"") accordin! to the study re!u"ar
articiants re!istered a faster rate of o(erty reduction
11.2 S(") L)SS(-S F'(" $%SF "(D)L
PKSF is uni&ue in its or!ani,ationa" structure) acti(ities and mana!ement ractices. + fe% factors can
*e identified that ha(e made it ossi*"e to re!ister such an imressi(e erformance.
11.1 PKSF has *een esta*"ished and funded *y the !o(ernment) *ut it has *een ket as an indeendent
or!ani,ation outside !o(ernment *ureaucracy. 8hat ena*"ed PKSF to form its o%n o"icies and
de(e"o its o%n mana!ement ractices suita*"e for its acti(ities.
11.3 8he outstandin! &ua"ity of the Go(ernin! Body has contri*uted most in !uidin! the mana!ement
and formin! and re(isin! o"icies %hene(er necessary.
11.6 8he o"icy of recruitin! officia"s of a*o(e a(era!e &ua"ity has contri*uted most to the !ro%th and
erformance of PKSF.
11.7 PKSF has *een successfu" in uti"i,in! the caacities of "oca" #G$s in &uick"y reachin! the oor
and de(e"oin! the P$s to de"i(er the financia" ser(ices to the oor. Se"ection of the ri!ht P$s %as
the most crucia" factor for PKSF’s success.
11.8 8he key to the sustaina*i"ity of P$s is the assured source of funds and the imro(ement in the
caacity of human resources *acked *y !ood mana!ement ractices. .n *oth areas) PKSF has ro(en
itse"f to *e effecti(e.
11.9 Financia" intermediaries /#G$s0 *acked *y resources from PKSF ha(e *een found to *e
effecti(e in reachin! the oor. Both PKSF and the P$s can a"so *ecome sustaina*"e in the rocess.
11.; 8he rura" oor and oorest men and %omen ha(e ro(en themse"(es to *e caa*"e of mana!in!
money and imro(in! their income. ;ike%ise) the P$s of PKSF ha(e ro(en the a*i"ity to se"ect the
ri!ht tar!et !rous and de"i(er the desired ser(ices.
11.= $ne area that needs to riority from PKSF is enhancin! the caacity of P$s. 8his can *e done
*y more in(estment in de(e"oment of the P$s’ human resources.
11.> 8he PKSF mode" /as an ae- second:tier or!ani,ation0 sho%s otentia" for re"ication. .t can
further !ro% and make a si!nificant contri*ution in imro(in! the &ua"ity of "ife for the oor and
13.2 Some challenges o# $%SF
8here are some cha""en!es %hich) in the resent conte-t) shou"d *e taken into consideration.
13.1 8here may *e tendency on the art of the !o(ernment to assert inf"uence on the !o(ernance and
mana!ement of PKSF /recent Grameen Bank e-eriences0. PKSF can maintain !o(ernance *ased on
its autonomy) accounta*i"ity of its stakeho"ders and efficiency and cost effecti(eness in mana!ement.
13.3 PKSF tye of or!ani,ation may find it difficu"t to kee itse"f out of o"itica" contro". 8he %ays to
tack"e this are a0 se"" out o*6ecti(es c"ear"y) *0 *e transarent and accounta*"e in !o(ernance and
13.6 PKSF has not yet *een (ery successfu" to for!e a "inka!e *et%een forma" financia" institutions
/*anks) financin! institutions0 and MF.s.
13.7 MF.s /esecia""y PKSF:P$s0 ha(e not *een a*"e to sto the unscruu"ous and i""e!a" acti(ities of
unre!u"ated financia" institutions %hich ha(e "ed to e-"oitation of the innocent and some%hat
uninformed oor eo"e *y so:ca""ed mu"ti"e(e" marketin! comanies) cooerati(e) sa(in!s societies.
8he re!u"atory re!ime of microfinance shou"d *e more effecti(e. 8he Microcredit 2e!u"atory
+uthority /M2+0 set u *y the !o(ernment of Ban!"adesh in 200C in c"ose co""a*oration %ith the
Ban!"adesh Bank /8he <entra" Bank0 can enforce rudentia" and mana!ement norms for MF.s.
13.8 .n some cases) since PKSF hea(i"y deends on donor fund) its emhasis on imro(in! the
ortfo"io &ua"ity of MF.s is not (ery si!nificant as such many MF.s suffer from oor &ua"ity of
ortfo"io. 8his issue has to *e addressed *y PKSF and its P$s. 8he deendence or donor fundin! of
PKSF and P$s shou"d *e !radua""y reduced and other a(enues of fund /securiti,ation) commercia"
sources etc.0 may *e e-"ored.
16.2 hallenges #or other countries
a0 8he !o(ernment of a country shou"d adot measures to romote microfinance as a art of
"on! term o"icy. <ontinued !o(ernment suort is an essentia" condition for success of an ae-
*0 8he ae- or!ani,ation shou"d *e desi!ned from the (ery *e!innin! to romote the
microfinance sector. For a sma"" microfinance sector) the si,e of ae- or!ani,ation shou"d a"so *e
consistent and shou"d not start %ith a 4*i! *an!5.
c0 +n esta*"ished microfinance market is not a necessary condition for hi!her ro*a*i"ity of
success of an ae- fund. +e- %i"" !ro% as the or!ani,ations it suorts !ro%) %ith the functions
of 4market de(e"oment5 of ae- fund.
d0 8he !o(ernment and donors shou"d ut emhasis on suortin! 4institutions5 rather than 4ad
hoc ro6ects5 and that re&uires settin! u of ae- fund.