File name: PKSF.Myanmar.

doc
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 Banks ro!ram many "ar!e #G$s in Ban!"adesh introduced microcredit ro!ram for their tar!et !rou s. Sma""er #G$s fo""o%ed the same ath. But the sma""er #G$s "acked ade&uate financia" su ort for their microcredit ro!ram. 'o%e(er) there %ere not many donors ready to come u %ith funds for microcredit ro!rams for these sma"") "oca""y *ased #G$s. +t the same time) for those %hich recei(ed some su ort 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 Su ort Foundation0 as an a e- 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" ca acity. PKSF) set u as a 4com any not for rofit5 *y the !o(ernment is uni&ue in its character and o erations.

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 im ro(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 s ecific o*6ecti(es of PKSF are9 a0 to ro(ide (arious ty es of financia" he" and assistance to non:!o(ernment) semi: !o(ernment) and !o(ernment or!ani,ations (o"untary a!encies and !rou s) societies and "oca" !o(ernment *odies) so that) as Partner $r!ani,ations /P$s0 and in consistence %ith the PKSFs ima!e and o*6ecti(es) they can undertake acti(ities %ith a (ie% to !eneratin! income and em "oyment o ortunities amon! the economica""y most disad(anta!ed !rou s in the society. *0 to assist in stren!thenin! the institutiona" ca acity 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"o ment 8he *asic o erationa" 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 !rou s throu!h its P$s) the de"i(ery mechanism for reachin! the oor. *0 .t ro(ides !reater thrust to institutiona" de(e"o ment. c0 .t fa(ors no articu"ar mode") instead inno(ations and different a roaches *ased on e- erience are encoura!ed.

7.2

L)GAL S*',

*,') (F

$%SF

;e!a""y PKSF is a 4com any "imited *y !uarantee5 meanin! 4com any not for rofit5 and is re!istered under the <om anies +ct of 1113=111> %ith the 2e!istrar of ?oint Stock <om anies. 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$B0) ri(ate indi(idua"s and or!ani,ations) forei!n !o(ernments) internationa" donors and "endin! a!encies and ca ita" markets. So far PKSF has recei(ed funds from the !o(ernment of Ban!"adesh /G$B0) the .@+=Wor"d Bank) AS+.@) +@B) .F+@) @F.@. Ku%ait Fund for +ra* 3conomic @e(e"o ment /KF+3@0.

9.2 9.1

('GA-&:A*&(-AL S*', General Body

*,') A-D

")"B)'S/&$

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 re resentin! 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 com osition of the Go(ernin! Body is as fo""o%s9 /i0 <hairman of PKSF /nominated *y the Go(ernment0) /ii0 the Mana!in! @irector /a ointed *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 com rises ersons of internationa" re ute 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 2e u*"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 a ointed *y the Go(ernin! Body. 'e is the e-:officio mem*er of the Go(ernin! Body.

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 re orts 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 im art trainin! to the staff of P$s. 8hese units are under the +dministration @i(ision.

PKSF from its ince tion 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 a e- financin! institution in(o"(ed in "on! term financin! of or!ani,ations %ith microfinance ser(ices) PKSF uts utmost em hasis 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 a e- or!ani,ation. 8hese inc"ude) amon! others9 a0 Pro(ision of "oana*"e funds to MF.s *0 @e(e"o in! *est ractices for microcredit mana!ement and o erations of MF.s c0 .nstitution=ca acity *ui"din! su d0 ;o**yin! for a ro riate microfinance sector 3ach of the functions are detai"ed *e"o%9 ort to MF.s

o"icies and re!u"ations usefu" for the e- ansion of

;.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 Microenter rise 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 $$S+ cate!ory P$s from PKSF are re aya*"e %ithin a eriod of 3 years. First C months are considered as a !race eriod and "oans a"on! %ith ser(ice char!e are to *e re aid in 10 &uarter"y insta""ments %ithin the rest 30 months. e0 ;oans recei(ed *y B.P$$; 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 a raisa"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 s onsors. c0 Fie"d (isit9 $nce an or!ani,ation is se"ected for fie"d (isit) an officer (isits the or!ani,ation. .f the erformance of the or!ani,ation is found satisfactory it is recommended for acce tance as P$. .f there is some deficiency) the concerned or!ani,ation is ke t under o*ser(ation and su!!estions are !i(en for im ro(in! the erformance. $n the other hand) if erformance of an or!ani,ation is found unsatisfactory) the a "ication is re6ected. Asua""y) the main reasons for re6ection are the financia" mismana!ement) !ross inconsistency *et%een information in the a "ication and that !athered from fie"d (erification. d0 + ro(a" *y the Go(ernin! Body9 8he fina" o%er of acce tin! an or!ani,ation as a P$ rests %ith the Go(ernin! Body. .f the mana!ement considers an or!ani,ation to *e acce ted as P$) the ro osa" is "aced %ith detai"ed descri tion of the or!ani,ation a"on! %ith the fie"d re ort) rationa"e for acce tin! it as P$ and recommendation of the M@) in a meetin! of the Go(ernin! Body. 8he Go(ernin! Body after de"i*eration acce ts or re6ects or uts certain conditions for acce tin! 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$. 8he "oan a!reement contains terms and conditions of "oan /e.!. rate of ser(ice char!e) area of "oan dis*ursement) num*er of insta""ments etc.0. 8he "oan is co""atera" free. .n addition to a "oan a!reement) a romissory note is si!ned *y the re resentati(e of the P$. /*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 su osed 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$s at an inter(a" of 3 months. !0 + "ication for Successi(e ;oans9 8he a ro(a" of successi(e "oans to a P$ de ends 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! re orts re!u"ar"y to the PKSF) /d0 otentia" for e- ansion of "oan ro!ramD and /e0 re ayment of "oan insta""ments to PKSF) if due. 8he successi(e "oan ro osa"s u to 8aka 2.B mi""ion are a ro(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 a ro(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 ca acity to make them fu"": artners e(entua""y.

>

;.1.6

Performance of Credit Program

PKSFs 2E1 P$s are dis ersed a"" o(er the country co(erin! a"" C> districts of Ban!"adesh. Loan Disbursement PKSF in its first year of o erations in 1110 cou"d dis*urse on"y ASL B0)000. 8hat %as the re aratory year for formu"atin! o"icies and a eriod of "earnin! to dis*urse "oan to institutions. A to ?une 2012) it has dis*ursed ASL 1EC0 mi""ion. Loan Outstanding PKSF has ASL >30 mi""ion "oan outstandin! %ith P$s as of ?une 2012. 8his does not inc"ude institutiona" de(e"o ment /.@0 "oan !i(en *y PKSF to its P$s. orro!ers +s of ?une 2012) tota" num*er of *orro%ers financed *y PKSF fund %as C.CB mi""ion of %hom more than 10G %ere %omen. "eco#er$ 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 re ared 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$s re resentati(es and officia"s. PKSF has a ro!ram to de(e"o standards in further areas and re(ie% and re(ise ones a"ready re ared. Ma6or o"icy !uide"ines and standards re ared *y PKSF are9 1. Statement of Polic$: Guide"ine for se"ection of P$s and Borro%ers for 2ura") Ar*an) 'ardcore oor and Microenter rise. 3. %uideline for &ccounts: PKSF fo""o%s accrua" *asis of accountin! a"on!%ith dou*"e entry system for kee in! *ooks of accounts. For P$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 antici ated "oan "osses shou"d *e sho%n se arate"y from other e- enses in the income statement. 2e(enue from donations shou"d *e sho%n se arate"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 im ortant 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 as ect of ortfo"io on a continuous *asis are c"assified ro er"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 kee in! system a"on! %ith direction for usin! sa(in!s fund %ith a (ie% to ensure rotection of de ositors. 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 o erationa" cost com onents of different cate!ories inc"udin! "oan "oss ro(ision) disaster mana!ement fund and ca ita" ac&uisition fund so that ma-imum amount of sur "us can *e !enerated for increasin! P$s e&uity *ase. ;. %uideline for &#oiding O#erlapping: When a househo"d recei(es microcredit from more than one MF.) this %i"" *e treated as an instance of o(er"a in!. +do tion of o(er"a in! o"icy %i"" he" in miti!atin! the emer!in! ro*"em of o(er"a in! at fie"d "e(e". =. 'anagement Information S$stem *'IS+: Formats used for in:house re ortin! of fie"d "e(e" acti(ities and for re ortin! to PKSF ro(ide a !ood *asis for ana"y,in! ortfo"io &ua"ity of M<P. P$s use these formats for re ortin! to PKSF on a month"y *asis. Some of the donors has acce ted the PKSFs re ortin! format for their o%n funded acti(ities. Aniform re ortin! sa(es time for MF.s. >. %uideline for Performance Standards and categori,ation of POs : PKSF has set u erformance standards for its P$s in re"ation to (arious as ects of microcredit mana!ement) o(era"" institutiona" stren!th and fund a*sor tion ca acity 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$sis: PKSF has de(e"o ed a ro!ram for financia" ratio ana"ysis co(erin! the fo""o%in! areas9 /a0 effecti(e financia" structure /*0 ortfo"io &ua"ity /c0 se"f:sufficiency /d0 o eratin! efficiency /e0 rates of return and cost) and /f0 !ro%th. Financia" ana"ysis a""o%s MF. mana!ement to identify stren!ths and %eaknesses in their microfinance ser(ices and ro(ides a *asis for *usiness "annin! and ro6ections. 11. Polic$ 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"o ed *y PKSF. 8his fund %i"" *e used for stren!thenin! the disaster co in! 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 re are an e- ansion "an /hori,onta" N (ertica"0 and the ne-t is to formu"ate some institutiona" de(e"o ment 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) trans arency and re ortin! 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 ur ose. + com rehensi(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. + com rehensi(e 8$2 is there to fo""o% uniform auditin! and re ortin! standard. 1=. &udit /O" for auditors appointed b$ POs : For uniformity of accountin! and re ortin! standard PKSF has !i(en a 8$2 for e-terna" auditor of P$s a ointed *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"o ment /.@0 of PKSF and its P$s ho"ds !reat im ortance es ecia""y from the oint of (ie% of sustaina*i"ity of the microcredit ro!ram that has so far *een o erationa" so successfu""y in Ban!"adesh. .nstitutiona" de(e"o ment has im "ications on a num*er of areas com risin! ro!ram outreach) a*sor tion ca acity of the MF.s) su er(ision and monitorin!) financia" mana!ement and contro") ersonne" o"icy inc"udin! human resource de(e"o ment /'2@0) sustaina*i"ity of micro: credit ro!ram and MF. itse"f etc. 8he institutiona" de(e"o ment com onents inc"ude trainin!) on:site technica" assistance) .@ "oan ro!ram) %orksho = seminars and research ro!ram.

7.3.1 /raining4
8rainin! for P$s ersonne" has *een identified as one of the (ita" acti(ities of PKSF for enhancin! institutiona" ca acity for successfu" mana!ement of microcredit ro!ram. 8o im "ement the trainin! ro!ram PKSF has created a 8rainin! Anit headed *y Genera" Mana!er +dministration. 8he unit is su orted *y a se(en mem*er .m "ementation 8eam /.80 consistin! of senior "e(e" staff mem*ers. 8he Mana!er and t%o +ssistant Mana!ers carry out the routine %orks of the unit. PKSF has identified some 8rainin! institutes *e"on!in! to *oth u*"ic and ri(ate sectors and out:sources its trainin! ro!rams to these institutes fo""o%in! the trainin! "an incor orated in the year"y trainin! ca"endar. /raining 5eed &ssessment4 + trainin! need assessment /8#+0 %as undertaken to desi!n trainin! modu"es for P$s and PKSF staff. Based on the 8#+) PKSF de(e"o ed 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 /rainees <hief 3-ecuti(es 'odules Financia" Mana!ement Sa(in!s +nd <redit Mana!ement Monitorin! N 3(a"uation Strate!ic P"annin! Good Go(ernance +ccounts Kee in! and Financia" Mana!ement <redit $ eration and Sa(in!s Mana!ement Su er(ision N Monitorin! 8rainin! of 8rainers @isaster Mana!ement Microenter rise +ccounts:Kee in! Financia" Mana!ement Grou @ynamics) Micro <redit N Sa(in!s Mana!ement 20 3ffecti(e Mana!ement of .G+Hs 1B 10 20 30 >0 B0 10 20 30 >0 B0 C0 10 20 10 Duration of training courses 3 days 3 days 3 days > days 2 days 3 days B days 3 days E days 2 days 3 days B days 3 days 3 days 3 days

Mid ;e(e" $fficers

+ccountants Fie"d Workers 8ota"

Training Modules for PKSF Staff Categor$ of /rainees 'odules Duration of training courses B @+FS B @+FS B @+FS

+ssistant Genera" Mana!er) 10 Financia" Mana!ement @e uty Genera" Mana!er 20 Strate!ic P"annin! 30 Monitorin! and 3(a"uation

Categor$ of /rainees

'odules

Mana!er) @e uty Mana!er 10 Financia" Mana!ement +nd +sst. Mana!er 20 Micro:<redit Mana!ement 30 Bud!etin! and +uditin! >0 .dentification and Mana!in! .G+Hs. 8ota" E

Duration of training courses E @+FS B @+FS B @+FS 3 @+FS

+ ne% dimension in the trainin! ro!ram has *een added introducin! on the s ot 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 as ects of mana!ement and o erations of their microfinance ro!rams. 8his on:site technica" assistance has *een found (ery effecti(e in im ro(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$s institutiona" de(e"o ment since 111E. Since FF 2000:2001 PKSF has introduced 1G interest to this "oan ro!ram. Pro(ides "oans to its P$s to make office:cum:trainin! centresD Buy <om uters) Motor <yc"es) By:<yc"es) 3n!ine Boats) and Photoco iers. 8his "oan is re aya*"e in t%o years in ei!ht e&ua" insta""ments.

7.3.7

.or8s(ops9Seminars4

PKSF or!ani,e a series of %orksho s on 4Stren!thenin! Microcredit $ eration5 of its Partner $r!ani,ations /P$s0. 7.3.: "esearc( Program4

PKSF !i(es much im ortance to research for institutiona" de(e"o ment. 8he o*6ecti(e of research ro!ram is to stren!then and su ort 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 a ro riate o"icies and re!u"ation. 8he Go(ernment has constituted a committee to re are a re!u"atory frame%ork for the countrys microcredit sector. PKSF is an im ortant mem*er of this committee and makin! contri*ution to he" the Go(ernment re are 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$stem : PKSF has de(e"o ed soft%are for P$ M.S usin! orac"e and @e(e"o er 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"o in! soft%are for P$s +ccounts. Credit ureau Database: PKSF has taken u a ro6ect to set u a <redit Bureau @ata*ase at PKSF. 8he data*ase %i"" ha(e information u to the *orro%ers "e(e" of a"" microcredit or!ani,ations of the country inc"udin! PKSF P$s and Grameen Bank. 8he data %i"" *e ke t 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. 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"o ed *y PKSF. 8his fund is

ii0

iii0

to *e used for stren!thenin! the disaster co in! 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$: PKSF since its (ery ince tion reco!ni,ed the fact that %ithout the acti(e artici ation of %omen %ho estimate B0G of the countryHs o u"ation) microcredit ro!ram %ou"d not *e a*"e to achie(e its o*6ecti(es. S$) 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 im ortant ro"e in em o%erment of %omen. %O65%O Partners(ip: PKSF has (ery successfu""y esta*"ished and de(e"o ed G$:#G$ co""a*oration in the fie"d of o(erty a""e(iation throu!h the ro(ision of microcredit.

(0

=.2

S,S*A&-AB&L&*0 (F $%SF

PKSF has achie(ed o erationa" and financia" sustaina*i"ity. .t can co(er its direct costs of o erations) such as sa"aries and administration costs) throu!h its interest earnin!s. PKSFs interest income from "oans *oth ensures o erationa" 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 o erationa" 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 trans arent and roacti(e !o(ernance system. .ts !o(ernin! *ody inc"udes ersons %ith internationa" re utation in the fie"d of rura" de(e"o ment) 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 o erationa" autonomy. +"" these factors ha(e contri*uted to PKSFs 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 ca acity ha(e tried to recruit com etent staff. P$s do not ha(e ade&uate financia" resources to recruit staff %ith *etter educationa" attainment and com etence. Many P$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 im ortant 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 o erations 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 im ro(e their rofita*i"ity.

12.2 &"$A

* (F

$%SF "&

'( ')D&*

$'(G'A"

=ig(lig(ts from t(e IDS Stud$ on PKSF>s 'onitoring and )#aluation S$stem +n e-tensi(e fie"d research conducted *y the Ban!"adesh .nstitute of @e(e"o ment Study /B.@S0 in 2003:> finds that the microcredit ro!ram of PKSF im "emented throu!h its P$s has *enefited the rura" oor in numerous %ays. 8he ro!ram has si!nificant"y increased incomes of the oor im ro(ed their standard of "i(in!) and contri*uted to their socia" de(e"o ment and) em o%erment.

+ccordin! to the Study) the microcredit ro!ram has su orted 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 trans ortation=trans ort ser(ices %here the ro!ram has made most si!nificant contri*ution. 8he study finds) (ery c"ose association *et%een ro!ram artici ation 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 artici ants 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 artici ants amon! the oor househo"ds. 8heir de endence on money"enders has a"so dec"ined. 8here is a"so a si!nificant ositi(e effect of re!u"ar ro!ram artici ation on income and on a(era!e consum tion of oor househo"ds. Particu"ar"y) increase in the consum tion of u"se) fish and mi"k. 8here is a"so some indication that a(era!e consum tion 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 artici ants durin! the f"ood year %as hi!her than a"" other sam "e !rou s) e-ce t the ne% artici ants. +ccordin! to the study) the ost:f"ood reco(ery %as remarka*"y &uick) sho%in! resi"ience ca acity of the oor rura" househo"ds of Ban!"adesh. +na"ysis of the study resu"ts sho%s noticea*"e im act of ro!ram artici ation in rotectin! from such natura" ca"amities=shocks. .m ro(ed economic %e"" *ein! due to ro!ram artici ation has contri*uted to reduction of househo"d "e(e" (u"nera*i"ity. 8he artici ant househo"ds %ere "ess (u"nera*"e concernin! hea"th crisis) "ar!e e- enses and (io"ence. Pro!ram artici ants tend to resort to soft o tions) such as) *orro%in! at ,ero or "o% interest rates) and throu!h mo*i"i,in! materia" and mora" su ort from atrons and kinshi net%ork. +n im ortant 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 artici ation 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 artici ants to *e "ess (u"nera*"e to crisis e(en thou!h they face simi"ar de!ree of crisis as non: artici ants. 8he study finds !enera" im ro(ements in "i(in! standards of a"" sam "e househo"ds. $ne e-am "e is the dec"ine in the use of o en s ace *y the adu"ts for the toi"et ur ose :the dec"ine *ein! "ar!est for occasiona" and re!u"ar artici ants. Simi"ar"y) access for chi"d immuni,ation im ro(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 artici ants. +ccess to other modern hea"th care faci"ities such as contrace tion re(a"ence increased for a"" and the increase in such access %as hi!her amon! the re!u"ar artici ants. $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 artici ants. 2esu"t of the study sho%s that artici ation in MF. ro!ram in !enera") and re!u"ar artici ation in articu"ar) had ositi(e effect on househo"d resource a""ocation on house re air) schoo"in! and hea"th care. +"" these had im ro(ed the socia" %e"" *ein! of the artici ant househo"ds more then the non: artici ants. More im ortant"y) artici ation 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) artici ation 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 artici ation on %omenHs re"ati(e osition has *een %ith res ect 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

10

has increased and their status in the fami"y has im ro(ed. $(era"") accordin! to the study re!u"ar artici ants 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 im ressi(e erformance. 11.1 PKSF has *een esta*"ished and funded *y the !o(ernment) *ut it has *een ke t as an inde endent 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 ca acities of "oca" #G$s in &uick"y reachin! the oor and de(e"o in! the P$s to de"i(er the financia" ser(ices to the oor. Se"ection of the ri!ht P$s %as the most crucia" factor for PKSFs success. 11.8 8he key to the sustaina*i"ity of P$s is the assured source of funds and the im ro(ement in the ca acity 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 ca a*"e of mana!in! money and im ro(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 !rou s and de"i(er the desired ser(ices. 11.= $ne area that needs to riority from PKSF is enhancin! the ca acity of P$s. 8his can *e done *y more in(estment in de(e"o ment of the P$s human resources. 11.> 8he PKSF mode" /as an a e- second:tier or!ani,ation0 sho%s otentia" for re "ication. .t can further !ro% and make a si!nificant contri*ution in im ro(in! the &ua"ity of "ife for the oor and oorest.

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 ty e 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 s e"" out o*6ecti(es c"ear"y) *0 *e trans arent and accounta*"e in !o(ernance and mana!ement. 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 /es ecia""y PKSF:P$s0 ha(e not *een a*"e to sto the unscru u"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! com anies) coo erati(e) sa(in!s societies. 8he re!u"atory re!ime of microfinance shou"d *e more effecti(e. 8he Microcredit 2e!u"atory

11

+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 de ends on donor fund) its em hasis on im ro(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$s. 8he de endence or donor fundin! of PKSF and P$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 ado t measures to romote microfinance as a art of "on! term o"icy. <ontinued !o(ernment su ort is an essentia" condition for success of an a eor!ani,ation. 8he a e- 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 a e- or!ani,ation shou"d a"so *e consistent and shou"d not start %ith a 4*i! *an!5. +n esta*"ished microfinance market is not a necessary condition for hi!her ro*a*i"ity of success of an a e- fund. + e- %i"" !ro% as the or!ani,ations it su orts !ro%) %ith the functions of 4market de(e"o ment5 of a e- fund. 8he !o(ernment and donors shou"d ut em hasis on su hoc ro6ects5 and that re&uires settin! u of a e- fund. ortin! 4institutions5 rather than 4ad

*0

c0

d0

12