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As an apex financing institution involved in long-term financing of organizations with microfinance services, PKSF puts utmost emphasis on attainment of both financial and institutional sustainability of these organizations. In order to achieve the objective of sustainability, PKSF performs the major functions expected of an apex organization. These include, among others:

1. Provision of microcredit funds to POs
2. Developing best practices for the microcredit sector
3. Institution/capacity building support to POs
4. Advocacy for appropriate policies and regulations useful for the microcredit sector

1. CREDIT PROGRAMME

PKSF provides loanable funds to its 199* POs – 3 big, 189 small and medium and 7 Pre-PKSF POs – under its mainstream credit programme as well as under some projects. PKSF’s mainstream credit programme, now, includes four components viz. Rural Microcredit; Urban Microcredit; Microenterprise credit and Microcredit for the Hardcore Poor.

The projects under which credit funds are provided include (i) Participatory Livestock Development Project (PLDP); (ii) Integrated Food Assisted Development Project (IFADEP); (iii) Training, Employment and Income Generation Programme (TEIGP) of Jamuna Multipurpose Bridge Authority (JMBA); (iv) Southwest Flood Damage Rehabilitation Project (Socioeconomic Rehabilitation Fund) (v) Sundarbans Bio-diversity Conservation Project (SBCP); (vi) Financial Services for the Poorest (FSP) project; and “Microfinance and Technical Support Project” funded by the International Fund for Agricultural Development (IFAD) and the Government of Bangladesh.

General Features of PKSF Credit Programme:

a) PKSF provides loans to two categories of POs- Organizations Operating in Small Areas (OOSA) and Big Partner Organizations Operating in Large Areas (BIPOOL).
b) PKSF funds four categories of microcredit programmes of its POs under its mainstream credit programme; (i) Rural microcredit (ii) Urban microcredit, (iii) Microenterprise credit and (iv) Microcredit for the hardcore poor.
c) PKSF charges 4.5% service charge per year from its OOSA category POs and 7% service charge per year from its BIPOOL category POs.
d) Loans received by OOSA category POs from PKSF are repayable within a period of 3 years in 10 equal quarterly installments with a grace period of 6 months.
e) Loans received by BIPOOL category POs are payable in 4 years in 12 equal installments with a grace period of 12 months.
 

Progress of Credit Programme:

As of December 31, 2003 PKSF provided microcredit fund to 199 POs. Starting with only 0.006 million beneficiaries in 1990-91, PKSF credit programme in 2002-2003 covered 4.17 million beneficiaries (Figure–1), the average annual growth rate during the period being 72.52%. 89.16% of PKSF beneficiaries are female.

Figure 1: Number of Borrowers of PKSF (In Million)

Figure 2: Annual Loan Disbursement of PKSF (Tk. in Million)

Figure 3: Annual Loan Recovery of PKSF (Tk. in Million)

Credit Disbursement under Special Projects:

In 2002-2003 PKSF also provided loans to the rural poor through its POs under four special projects – (a) Participatory Livestock Development Project (PLDP) funded by the Asian Development Bank; (b) Integrated Food Assisted Development Project (IFADEP) funded by the European Commission; (c) Training, Employment and Income Generation Programme (TEIGP) of Jamuna Multipurpose Bridge Authority (JMBA);
 

Figure 4: Percentage of Direct and Revolving Loan Since Inception.

(d)Southwest Flood Damage Rehabilitation Project (Socioeconomic Rehabilitation Fund); and (e) Financial Services for the Poorest (FSP). In FY 2002-2003, total amount of loan disbursed under the five projects was Tk. 215.95 million. At the end of FY 2002-2003, cumulative amount disbursed under the five projects was Tk. 756.60 million.

2. DEVELOPING BEST PRACTICES FOR MICROCREDIT SECTOR

PKSF has prepared a number of policy guidelines and standards for its POs and for the microcredit sector involving the practitioners of PKSF, POs and others concerned. PKSF reviews its policies and programmes continuously and adjusts them to meet the changing requirements. PKSF has a programme to develop standards in further areas. Major policy guidelines and standards prepared by PKSF are:

1) Statement of Policy: Guidelines for selection of POs and borrowers for Rural, Urban and Hardcore poor and Microenterprise;
2) Guideline for Accountants;
3) Policy for Loan Classification and Debt Management Reserve;
4) Guideline for Designing Internal Control System for POs of PKSF;
5) Guidelines for Management of Savings;
6) Guidelines for Management of Service Charge Earnings;
7) Guidelines for Avoiding Overlapping;
8) Management Information System (MIS);
9) Guidelines for Performance Standards and Categorization of POs;
10) Financial Ratio Analysis;
11) Policy for the Utilization of Disaster Management Fund;
12) Guidelines for Indicators for Early Warning System;
13) Business Plan for POs;
14) Guideline for Management Audit of POs by PKSF;
15) Guideline for Internal Audit of POs by PKSF;
16) Audit TOR for External Auditor of PKSF for Auditing PKSF;
17) Audit TOR for External Auditor of PKSF for Auditing its POs;
18) Audit TOR for Auditors appointed by POs;
19) Policy for Loans for Institutional Development.
20) PKSF Microcredit Programme Funding Policy for Indigenous Ethnic Minorities.

3. INSTITUTION / CAPACITY BUILDING SUPPORT TO POS

Institutional development of PKSF and its POs holds great importance especially from the point of view of sustainability of the microcredit programme. Institutional development has implications on a number of areas such as programme outreach, loan absorption capacity of the POs, supervision and monitoring, financial management and control, personnel policy including human resource development (HRD), sustainability of microcredit programme, etc. The institutional development components include the following:

a. Training

b. Technical Assistance

c. Research Programme

4. ADVOCACY FOR APPROPRIATE POLICIES AND REGULATIONS OF THE MICROCREDIT SECTOR:

PKSF lobbies with the Government and other relevant organizations for appropriate policies and regulation in the microcredit sector. The Government has constituted a committee to prepare a regulatory framework for the country’s microcredit sector. PKSF is an important member of this committee and making contribution to help the Government prepare a microfinance friendly regulatory framework