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American International University of Bangladesh

Submitted For
Submitted Date
Subject: Macro Economics
Section: H

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Assignment Tropic
Palli Karma Sahayak Foundation(PKSF)


Palli Karma Sahayak Foundation (PKSF) was set up by the Government of Bangladesh
in May 1990, as a non-profit organization for alleviation of poverty. The meaning of
Bengali ‘Palli Karma Sahayak Foundation’ is ‘Rural Employment Assisting Foundation’.
But PKSF is also doing some activities among the urban poor of Bangladesh in some
selected areas. PKSF is an apex funding agency, empowered to channel microcredit funds
to its Partner Organizations (POs), i.e. Micro Finance Institutions like NGOs, Banks,
Cooperatives etc, for on-lending to the rural poor, especially to the women, for poverty
alleviation through the creation of self-employment opportunities (PKSF, 1990). PKSF
also has a role in MEI capacity building to promote financially viable partner MFIs in
Bangladesh. PKSF’s mission is to ensure that the funds it distributes are used in ways that
will ensure that PKSF has a repayment rate that is no less than that which it expects its
partner organizations to achieve.

Since 1990, PKSF has been operating the loan fund from the Government of Bangladesh,
the World Bank, The Asian Development Bank , and The International Fund for
Agricultural Development and The United States Aid for International Development.

It appeared to have done so very successfully and has, in the process, acquired valuable
experience in the fields of poverty alleviation , both income and wealth creation based
poverty reduction among the rural poor, microenterprise development, MFI ratings,
financial intermediation product and services development and capacity building for
sustainable microfinance.

From the very beginning PKSF got a learned governing and dedicated management staffs
to achieve its specific objectives. Some factors like pro-microcredit environment,
population density and homogeneity, geographical characteristics, less involvement of
Government etc. make easy to reach its goal. Though PKSF has become one of the most
successful apex microfinance organizations in the World, but it has also faced several
challenges.This essay explores the achievements of PKSF in each of these areas with a
view drawing out lessons learned and issues to be addressed.
Background in Establishment of PKSF
In 1984, The World Bank entered into dialogue with the GOB on a project titled ‘A
Framework for Additional Efforts to Address Rural Poverty and Employment’. In that
project proposal, the World Bank and the GOB proposed to set up a network of “Upazila
Employment Resource Centers (UERC) to replicate both the Grameen model for
microcredit and the BRAC model for education and skills. The original proposal was
built around the contracting of a foreign NGO as an implementing organization for this
project, in the much the same way that the World Bank had facilitated the strengthening
of national agricultural research organizations through the Bank auspiced Consultative
Group for International Agricultural Research.

On behalf of the World Bank Mr. Nijhawan worked as the designated project officer. He
was soon to find that the proposal would undergo significant alteration as the official
dialogue channels were expanded to include local Bangladeshi microfinance
professionals, especially Dr Mohammed Yunus. Professor Yunus’s initial reaction to the
proposal was critical but constructively so. He welcomed the prospect that an additional
source of funds might be created to facilitate the growth of outreach and capacity
building. However, he was quite negative about the proposed structure, the proposed
activities of the organization, and the role of the proposed foreign implementing agency.
Though PKSF was a pioneer organization in its type, none of party were not that much
sure about the actual model for this potential intervention. On this project main objective
was rural employment generation. Debate was how it will happen. It has been found from
related document and literature that The World Bank was trying to keep this organization
from formal Government structure and GOB were trying to keep indirect, but strong
contact with this organization. From Government side, GOB explored lots of options like
forming “Rural Non-farm Employment and Training Project’, “Foundation for Rural
Employment”, “Upazila Resources Development and Employment Project (URDEP), etc.
From the very beginning the World Bank tried to put some usual conditions and GOB
was trying to avoid this conditions. GOB was strict to set up organization with its own
money and tried to gather some experience. Then GOB, i.e. PKSF was interested to sit
with the World Bank. As a matter of fact, PKSF was established with Government own
money and the World Bank was rejected the initial idea of PKSF canceling the proposed
loan fund from the World Bank on June, 1990. But the Government of Bangladesh
(GOB) on that time was very interested to set up one organization like PKSF.

Finally the proposal of PKSF was approved by the presient on Noveber 12, 1989 and
appointed Mr. Badiur Rahman, Joint Secretary as an interim officer from Govt. to look
after the establishment process. Govt. appointed Mr. M Sayeduzzaman, Ex Fianace
Minister of Bangladesh as a Chairman and professor Yunus, Mr. Abdul Muyeed
Chowdhury, Present executive director of BRAC and former secretary of Govt. of
Bangladesh., Director General of President’s Office as a member from government
Objectives of PKSF
PKSF was set up in 1990 by the government of Bangladesh with the overall objective of
alleviating poverty and improving the quality of life of the rural poor, the landless and the
assetless people by providing them with resources for creation of self employment for enhancing
the economic conditions. The specific objectives of PKSF are:

● to provide various types of financial help and assistance to non-government, semigovernment,

and government organizations, voluntary agencies and groups, societies and local government
bodies, so that, as Partner Organizations (POs) and in consistence with the Foundation's image
and objectives, they can undertake activities with a view to generating income and employment
opportunities among the economically most disadvantaged groups in the society;

● to assist in strengthening the institutional infrastructure of the Partner Organizations, so that

they can improve their present operations.

Major objectives of PKSF

The major objectives of PKSF as follow:
▪To provide credit to MFIs for generating employment for the poor.
▪To initiate, undertake and promote research activities directed towards poverty
alleviation and pro-poor employment generation in rural Bangladesh.
▪To establish strong advocacy for pro-poor policy in home and abroad especially
in the field of microfinance.

Operational Strategies of PKSF

The basic operational strategies of the Foundation have been drawn from its objectives:

a) It does not directly lend money to the landless and the assetless people of the rural areas
rather reaches its target groups through the Partner Organizations, the delivery mechanism for
reaching the poor.

b) It provides greater thrust to institutional development.

It favors no particular model, instead innovations and different approaches based on

experience are encourage
Loan Disbursement Status

Last five year PKSF’s loan disbursement (excluding institutional

development loan) 2003/04-2008/09.

PKSF has disbursed loans amounting to Tk. 3,393 million in the financial year 2003-
2004. Tk. 3,640 million in the financial year 2004-2005, Tk. 6,886 million in the
financial year 2005-2006, Tk. 13,452 million in the financial year 2006-2007, and Tk.
14,046 million in the financial year 2007-2008.

These disbursed loans can shown through tables and graph……..

Figure 1.1, Loan Disbursement

Table: 1.1, Loan Disbursement

Loan Disbursement Target during FY 2008-2009

PKSF has a loan disbursement target of Tk 2,037.51 million for FY 2009-2010 of which
Tk 1,749.27 million will be disbursed under the mainstream programs and Tk 288.24
million under different projects. The loan disbursement target is based on demand and
disbursement plan made by its POs.
PKSF 2008 Highlights (As of 30 June 2008 )

Number of Partner MFIs 233

Number of Group Members 1,11,65,235
Percentage of Women members 90.06
Number of Microenterprise Members 1,68,370
Number of Borrowers 82,83,814
Loan Disbursement in the Year (Tk in million) (PKSF-PO) Excluding 14,046
ID Loan
Cumulative Loan Disbursement (Tk in million) (PKSF-PO) Excluding 56,415
ID Loan

Loan Disbursement in the Year (Tk in million) (PO-Member) 76,185.31

Cumulative Loan Disbursement (Tk in million) (PO-Member) 3,69,654.02
Loan outstanding with the POs (Tk in million) 24,342.87
Loan Outstanding with the Borrowers (Tk in million) 41,945.47
Institutional Development Loan to POs (Tk in million) 234.19
Number of PO Staff Received Training from PKSF 10,741
Number of Borrowers Received Training from PKSF 11,59,409
Programs and Projects

PKSF maintain some products by which it provides their loan based on this products.
During 2003-2004 PKSF began their projects with these products...

RMC(Rural Microcredit),

UMC(Urban Microcredit),

MEL(Micro Enterprise Lending)

UP(Ultra Poor)


Products FY 2003-2004
Cumulative FY Loan No. of No. of
Loan Disbursement Members Borrowers
Disbursement (Tk million)
(Tk million)
RMC 117239.19 26043.44 6192465 4427882
UMC 8475.76 2649.89 288701 255577
MEL 1339.27 1294.59 30888 27587
* UP 1175.94 516.95 211650 180373
Livestock 2386.64 263.98 519311 213521
From 2004-2005 PKSF also increase their some loan disbursement


DMF(Disaster Management Fund)

MFMSF(Microfinance for Marginal and Small Farmer)

LRP(Livelihood Restoration Program)

Products FY 2004-2005
Cumulative Loan FY Loan Disbursement No. of Members No. of Borrowers
Disbursement (Tk (Tk million)
RMC 145032.56 27793.37 6634896 4620427
UMC 11943.38 3067.62 337928 288326
MEL 3151.02 1811.75 66732 65623
* UP 1627.36 376.77 376600 306109
Livestock 3596.28 1684.30 324844 230050
Seasonal Loan – – – –
DMF 18.33 18.33 11912 11871
MFMSF – – – –
LRP – – – –

FY 2005-2006
Cumulative Loan Disbursement (Tk million) FY Loan No. of Members No. of Borrowers
Disbursement (Tk
184454.82 39422.26 7613873 5241324
19628.58 7685.21 481516 415591
6100.70 2949.68 116173 102279
4041.49 1247.05 629840 537829
6205.16 3775.95 570034 453873
115.96 115.96 9158 5577
23.36 5.03 3004 3004
148.80 148.80 29787 18785
– – – –

Products FY 2006-2007
Cumulative Loan FY Loan Disbursement No. of Members No. of Borrowers
Disbursement (Tk (Tk million)
RMC 230834.75 46379.93 7489986 5543277
UMC 26764.77 7136.19 585089 492482
MEL 12077.70 5977.00 135486 128555
* UP 7790.31 3748.83 833064 708062
Livestock 13729.41 5881.51 705691 594752
Seasonal Loan 890.63 774.67 33061 26120
DMF 35.84 12.48 3225 2645
MFMSF 1040.53 891.72 97481 78812
LRP 339.29 339.29 149595 148746

Products FY 2007-2008
Cumulative Loan FY Loan No. of Members No. of Borrowers
Disbursement (Tk Disbursement (Tk
million) million)
RMC 276594.78 45760.02 8313316 5994217
UMC 35768.31 9003.54 717927 600632
MEL 19116.00 7038.30 168370 160207
UPP* 11311.90 4155.09 979839 776702
Livestock** 19624.40 5929.51 767681 581677
Seasonal Loan 2143.62 1252.99 52665 46439
Rehabilitation*** 2383.48 1374.86 349125**** 348002****
MFMSF 2593.67 1553.15 142111 111265
REDP 27.07 27.07 7715 5320
RNPPO 90.79 90.79 15611 7355

* UPP Ultra Poor Program+FSP+LIFT+TEIGP (JMBA)



**** Member and borrowers under Rehabilitation Loan Program are also the member and borrowers of other

From 2008-2009 PKSF also provides loan in terms some new products such as Rehablitation, REDP (Rural
Electrification Development Project), RNPPO (Rehablitation of Non-Motorized Transport Pullers and Poor Owners)

Observations/ Major Findings

PKSF is called an apex funding agency. Actually there was no alternative institutions of
PKSF from the beginning of PKSF. It is the unique institution in Bangladesh that funding
capital to improve to the assetsless, landless through their partner organizations. PKSF is
a foundation who collect fund as a agent from the Government of Bangladesh(GOB), the
World Bank(WB), The Asian Development Bank(ADB), and The International Fund for
Agricultural Development(IFAD), and The United States Aid for International
Development(USAID) and funding this fund to the poor, ultra-poor, assetsless and those
who are unable to supply their basic needs through partner organization. PKSF’s main
purpose is to increase the efficiency level and make a position to the market through
financial supports and partner organisation’s staff training of partner organization. At
present PKSF has two hundred and thirty three(233) partner organizations. Among them
some organization’s primary performance and fund was too weak but nowadays their
overall performance is satisfy able by the support of PKSF. Jagorani Chakra Foundation
is partner organization of PKSF Who’s primary performance was not so good but now it
can be able to contribute poverty allevation, micro-finance, education, food security,
capacity building, human rights, relief and rehabilitation, health and interventions sectors.
Thus TMSS, SSS etc.