1. Criteria for Selection of "OOSA" (Organizations Operating in Small Areas) Category POs

PKSF is presently carrying out its operations through various Partner Organizations (POs), therefore, selection of PO is a crucial task of PKSF and this is an ongoing process. Under this process PKSF appraises various types of non-government, semi-government and government organizations, voluntary agencies, societies and local government bodies to select these as POs which have gained experience and expertise or which have the potentials to operate a successful microcredit programme for self-employment and income generation of the landless and assetless. In appraising an organization, PKSF follows a clear guideline which can be divided into the following areas: (i) Organization; (2) Organizer; (3) Management; (4) Human Resources; (5) Working Area; (6) Field Activities; (7) Past performance; (8) Management Information System (MIS) and (9) Accounting System.
According to the above-mentioned guideline, to become a PO, an organization should have the following features.

(a) Organization:
- The organization should have a legal basis i.e., if it is a non-government and voluntary organization it is to be registered with the appropriate registration authority such as the Directorate of Social Welfare, Department of Women's Affairs, Registrar of Cooperatives, NGO Affairs Bureau etc.
- It should have a constitution duly approved by the concerned registration authority.
- It should have a General Body and an Executive Committee approved by the concerned registration authority.
- In case of government, semi-government and local bodies it must be formed lawfully.
- The organization should have the mandate to operate credit programme for self-employment and income-generation activities of the landless and assetless with an admissible service charge.
- It should have a mandate to borrow money from the government, semi-government, private and any other organizations.

(b) Organizer:
- The organizer(s) or founder(s) should be socially reputable, respected, and honest with intention to serve the poor people
- Organizers are to be acceptable to the staff, group members and to the community in general.
- The organizers should have the capability and vision to develop a future perspective and strategic plan of a development organization.
(c) Management:
- The organization should have an organogram.
- The Chief Executive should be full-time and should possess the mentality to work on a long-term basis. In case of local organization the Chief Executive have to stay in the working area.
- The Chief Executive should have good and dynamic leadership quality and should demonstrate good management capability and be able to formulate strategic plan for the organization.
- The organization should have adequate number of regular and full-time staff to ensure proper implementation of microcredit programme.
- The Chief Executive should have a good reputation and should be acceptable to the staff, group members and to the community in general.

(d) Human Resource:
- The organization should have trained and skilled manpower to administer the organized group and to maintain a sound accounting system.
- Staff should be honest, dedicated and should possess missionary zeal.

(e) Working Area:
- Working area of the organization should be well suited for microcredit operation. It should have good communication network, banking facility and easy access to market so that the borrowers can utilize their loan profitably.
- It should be poverty stricken and such rural areas will be given preference.
- There should be potentials for expansion of the programme by avoiding duplication with the activities of the other organizations in the same area.

(f) Field Activities:
- Members organized would be the landless and assetless; the characteristic features of whom would be as follows: those residing in rural areas owning less than 0.50 acre of cultivable land or having total asset of the value less than that of one acre of land in the locality, would be considered as landless-assetless.
- Members are to be organized in groups and groups must be formed with like-minded people who should be conscious/careful about group discipline and regular in attendance in group meeting and making saving deposits. Members should have a minimum 6 months practice of regular saving deposit.
- The organization should have at least 400 organized members, Tk. 0.2 million operating loan outstanding at field level and should have experience of at least 6 months successful microcredit operation.
- Number of organized members should be consistent with the working/operating capital of the organization.
- Groups should be organized within the 10 Km radius of the project office.
- In case of local organization, 'Head Office' should be situated in the working/operational area.
- The organization has to maintain a minimum loan recovery rate of 98% on a continuous basis. For a programme operating for more than three years a minimum loan, recovery rate of 95% has to be maintained on a continuous basis.
- Overlapping with the activities of other organization in the same area must be avoided.

(g) Past Performance:
- The organization should have a demonstrated experience of ensuring proper utilization of loan money with maintaining a high rate of recovery on a continuous basis.
- It should have the evidence of successful implementation of all the programmes undertaken by the organization.
- It should have properly organized members and groups for successful operation of microcredit programme.

(h) Management Information System (MIS):
- System for collecting information from member, group and office level for proper management and monitoring of the microcredit programme should be present.
- Adequate information should be available regarding microcredit operation.

(i) Accounting System:
- The organization should maintain a sound, systematic, correct, detailed and transparent accounting system.
- The organization should not have case of any misappropriation or illegal withdrawal of fund.
- Savings account of the group members must be complete, detailed, transparent and correct.
- All the accounts should be duly audited by the proper authority and the reports should be readily available.
- All the accounts must be correct and updated.

2. Criteria for Selection of "BIPOOL" (Big Partner Organizations Operating in Large Areas) Category POs

- The PO is operating a successful Microcredit programme for a minimum of 5 years;
- It has at least 100,000 borrowers with a strong potential for expansion;
- It has at least Tk. 100 million of equity (including foreign grants, surplus etc.) of its own on the programme;
- The debt-equity ratio does not exceed 2.5:1;
- It maintains a strong and transparent accounting, internal audit and management information system;
- It has its accounts audited by a reputed external auditor on an annual basis; and
- The minimum loan recovery rate is 95%.

3. Guideline for Selection of Pre-PKSF Partner Organizations

The 103rd Governing Body meeting of PKSF held on 14 June, 2001 decided to enlist Pre-PKSF-POs to support potential local NGOs which are yet to qualify the set criteria for becoming an OOSA-PO of PKSF but are run by honest, sincere, dynamic people. A number of customised training facilities with a small amount of loan are provided to the selected Pre-PKSF partner organizations to improve their overall institutional capacity with an objective to graduate within 6-12 months to enable them to become POs under OOSA category.

4. Guideline for Avoiding Overlapping

In close consultation with a number of POs, PKSF has recently formulated a policy to avoid overlapping. The main features of the policy are as follows:
Definition of overlapping
When a household receives microcredit from more than one institution, this will be treated as an instance of overlapping although the same household can establish links with more than one service providing institution/agency without being branded so. Therefore, in case of microcredit, one household will be able to receive credit from only institution.
Policies to avoid existing overlapping
(a) The microcredit institutions working in a particular village must posses the list of their respective samities/groups along with list of their members, their date of joining, household number and address. The application for membership should contain the photograph of the applicant. Once enrolled, the member should have an identity card containing his/her photograph in it.
(b) The microcredit institutions working in a particular village must exchange the list of their respective borrowers once in every three months. The exchange of the list may be done quicker, if necessary, in the village where overlapping allegedly exists.
(c) There should be a thana level forum of the microcredit institutions the members of which should meet initially once in every month and later once in every three months to regularly review the situation and take appropriate action to stop overlapping and its recurrence in future.
If the problem still remains unresolved, the matter should be referred to their respective head offices. If still unresolved, the issue may be discussed with PKSF.
(d) A list of those members from the same village who have received microcredit from and/or accumulated savings in more than one agency would be prepared and, subject to discussion with the concerned members, they would be allowed to stay with the organization they prefer. However, the concerned members will have to repay all debts to the organization they are leaving and obtain a clearance certificate from it.
(e) In order to check if any member received microcredit from more than one agency, the microcredit field staff or officers of the agencies may attend the weekly meetings of centers/samities of one another.
(f) A special seal will be stamped on the Pass Book of the member who received loans from more than one source so that the member can be easily identified. However, caution will have to be applied to avoid negative influence on the concerned borrower.
(g) The field workers of the local branch of the microcredit institutions must be fully aware of the list of borrowers that received credit from more than one source and the concerned official would motivate the concerned borrowers to repay loans of the other institution in addition to his/her own. After the loan is repaid, action as per d above would follow.
Policies to avoid future overlapping
(a) The members organized by one organization cannot be taken over by another organization without prior consultation with the concerned organization.
(b) The practice of waiting for credit by the borrowers after being organized must be uniform for all the agencies working in a village. In this case duration of waiting varies from 8 to 12 weeks. The members or potential borrowers who failed to receive credit from one organization even after waiting for 12 weeks may be taken over by another organization but in that case they will have to wait for another 8 to 12 weeks under the new organization to receive credit.
(c) The list of new members along with their addresses of one organization must be circulated to other organizations working in the same village. If no objection is received within 15 days of the circulation, it would be safely assumed that the enlisted people are not members of any other organization and hence the list is final. The persons about whom objection have been received should be absorbed by any of the organizations after mutual discussion. If needed, a household may be provided with a maximum of two loans simultaneously to overcome the situation.
(d) The member who has just started savings under one organization and was subsequently found to have already received loan from another organization, should receive immediate refund of his/her saved amount along with cancellation of membership.
(e) The local level officers of the organizations will hold monthly review meetings at the thana forum. The unresolved issues of that review meeting should be referred to higher authorities of the concerned organizations to resolve before the next meeting. If still not resolved, this should be informed to PKSF in black and white.
(f) Since microcredit is targeted to the poor, there should be uniformity in the maximum size of the first loan in the loan products under it. Here in this case the maximum size of the first loan should be Tk. 4,000 irrespective of the organization delivering it. This can, however, be enhanced in future to take care of inflation. This ceiling can be exceeded for microcredit under special programme.
(g) While considering inclusion of new POs, PKSF would look into the number of other microcredit institutions and their programme in the concerned area.

5. PKSF Microcredit Programme Funding Policy for Indigenous Ethnic Minorities

1. Introduction

1. This Policy describes broad framework for microcredit programmes (MCP) that affect indigenous peoples.
2. PKSF will extend microcredit through selected partner organizations (POs), among indigenous peoples, tribes, ethnic minorities, or other groups to increase their capacity to assert their interests and rights in land and other productive resources, following the general principles and guidelines of PKSF.
3. It sets the basic definitions, policy objectives, guidelines for the design and implementation of MCP for indigenous peoples, in a sustainable manner.
4. It should be consistent with the overall policies of the GOB with respect to indigenous ethnic minorities.

2. Definitions
1. The terms "indigenous peoples," "indigenous ethnic minorities," "tribal groups,'' and "scheduled tribes" describe social groups with a social and cultural identity distinct from the dominant society that makes them vulnerable to being disadvantaged in the development process. For the purposes of this directive, "indigenous peoples" is the term that will be used to refer to these groups.
2. Because of the varied and changing contexts in which indigenous peoples are found, no single definition can capture their diversity. Indigenous people are commonly among the poorest segments of a population. They engage in economic activities that range from shifting agriculture in or near forests to wage labor or even small-scale market-oriented activities.
3. In accordance with the policies of the GOB, indigenous peoples can be identified in particular geographical areas: Chakma, Mong in Chittagong Hill Tracts (CHT),Manipuri’s in Sylhet, Garos in Modhupur and Mymensingh, Shawntals in Rajshahi, etc.
4. The following characteristics are distinct in varying degrees among the indigenous people:
a) A close attachment to ancestral territories and to the natural resources in these areas;
b) Self-identification and identification by others as members of a distinct cultural group;
c) An indigenous language, often different from the national language;
d) Presence of customary social and political institutions; and
e) Primarily subsistence-oriented production.

3. Basic Asssumptions for Intervention

l. PKSF addresses the indigenous peoples through its Partner Organization (PO). PKSF will provide fund for MCP, as well as assistance for institutional development following the general principles and strategies of PKSF.
2. MCP will encourage provisions of income generating activities like agriculture, fisheries, forestry, hydropower, horticulture, tourism and all kinds of small business and production.
3. The POs shall have a track record of successful performance of MCP for at least a year.
4. PKSF will monitor the MCP according to PKSFs performance standard.
5. PKSF’s overlapping policy guidelines shall apply for MCP funding.
6. An upper ceiling rate of service charge from the target people for their loan from PO may be followed as per loan agreement with PKSF.
7. For selection of PO, the environment should be carefully screened. Issues related to indigenous peoples are commonly identified through the environmental assessment or social impact assessment processes, and appropriate measures should be taken under environmental mitigation actions.
8. The POs in their operational areas will attach due respect and importance towards the ethnic features, education, culture, environment, religion, customs of the area and can not conduct propaganda- campaign or undertake activities that may cause threat to those features; rather conduct their programmes keeping harmony with those features.
9. POs should give preference for local people in recruitment of manpower. As because of the convenience for their language and culture, the local people, if recruited, will help POs implement their programmes. Recruitment should be made on the basis of male female ratio at a reasonable rate.
10. The POs will operate MCP keeping social harmony among the inhabitants in local area irrespective of religion, groups, race, clan, caste etc.
11. The POs which are willing to work with indigenous people have to observe the following restrictions:

a) No such activities that create hindrance to social harmony between the races of Tribes- Bangalee can be undertaken.
b) No anti religion or unethical activities, particularly campaign for religion conversion will be allowed.
c) No PO can undertake such activities that provoke communal unrest.
d) Any activities that cause hindrance to national or regional security can not be undertaken.
e) Any such activities that inspire the inhabitants of those areas to involve in separatist, religious or racial movement cannot be undertaken directly or indirectly.
f) No PO will be involved in any political activities directly or indirectly.
g) The PO will not be allowed to maintain linkage with any persons/ organizations or any political parties that are engaged in any illegal activities at home/ abroad.

12. The MF-NGOs should restrict their activities to the purview of their work plans and working areas as approved. If any MF-NGOs is involved in any activity beyond the work plans and the areas as approved or violate the restrictions as mentioned above at 3.11(a) –3.11(g), legal action including actions of cancellation of registration may be taken against them.
4. MCP funding of POs working in CHT, shall follow the following guidelines:
a) POs intending to work in CHT needs to obtain “no objection” from the Ministry of Chittagong Hill Tract Affair/Regional Council/concerned District/Local Government Council, and concerned government agencies dealing with indigenous ethnic minorities.
b) If necessary, periodically, PKSF may share progress report of PO with, the NGO Affairs Bureau or an attached office of government organization and the Ministry of Chittagong Hill Tract Affair/Regional Council/concerned District/ Local Government Council will evaluate the activities of concerned NGO in that area.
c) Before applying to PKSF for further expansion of MCP in the new local areas, PO has to seek clearance from the Local Government Council of CHT.
d) For POs working in CHT, PKSF may share the progress and evaluation reports on their activities to the Convenor of the committee and the District Commissioner. Besides, the NGO Affairs Bureau and the registration authorities will regularly maintain contacts relating to NGOs` activities, ensure coordination and send related reports to the Ministry of Chittagong Hill Tract Affairs/Regional Councils/concerned district Local Government Council and PKSF.
e) If any dispute in connection with conducting the programme or coordination arises, the issue(s) may be referred by PKSF to the Ministry of Chittagong Hill Tract Affairs through NGO Bureau for its settlement.

6. Policy for the Utilization of Disaster Management Fund

The policy for the utilization of the disaster management fund which will be used to provide support to the PKSF POs’ microcredit borrowers affected by natural calamities like floods, draughts and cyclones:

1. The concerned PO will determine the size of the disaster loan to be given to a ‘beneficiary’ family after assessing its real need.
2. Disaster loan will be used for rehabilitation of the affected family.
3. Disaster loan will be given in one installment and the loanee will use this loan for self-rehabilitation.
4. The PO will not claim service charge or any other charge for this loan.
5. The PO will recover disaster loan in equal installments which are tolerable to the loanee. The PO will inform PKSF about the size, duration and repayment schedule before receiving fund from PKSF.
6. Before providing this loan the PO will sign a loan agreement with the loanee wherein terms and conditions of the loan should be mentioned.
7. The PO will maintain all records and accounts of disaster loan fund and supervise and monitor its use and repayment.
8. The PO will send monthly report to PKSF with regard to the use and recovery of disaster loan. PKSF will supervise and monitor the use of the disaster loan.
9. Under no circumstances, the PO will use the disaster loan fund for other purposes. This fund will be treated as a part of the POs’ ‘Disaster Management Fund’ in which the PO shall have its own contribution.
Following clause ‘9’ the PO will contribute a specific portion of its surplus service to this fund on a quarterly basis.