PKSF is the apex funding organization of the microfinance programs carried out by various Microfinance Institutions (MFIs) in Bangladesh. PKSF has been established to help the poor, landless and assetless to gain access to resources for productive undertakings, employment and the enhancement of their quality of life. The specific objectives of PKSF are:

1. To provide assistance (including financial, institutional, advisory and training) to non-government, semi-government and government organizations, voluntary agencies and societies, local government bodies, institutions, and groups of individuals as Partner Organizations (POs) that generate income and employment opportunities for the poor, landless and assetless.

2. To support, promote, develop and identify employment opportunities for the poor, landless and assetless; and to provide them with credit as well as other assistance including education and training as may be necessary for development of their skills.

3. To build and strengthen the institutional capacity of the POs and enhance their ability to provide access to resources for the poor.

4. To support, promote and sponsor innovative programs and projects for creating awareness among the poor to improve their quality of life and to make them self-reliant through the process of creating productive employment opportunities for them.

5. To help the poor to diversify and strengthen their survival strategies, enhance their security, give them access to assets and rights, and augment their self-respect providing them greater choices and independence.

6. To promote and stimulate innovative ideas and methods which emphasize and focus on new technologies and ideas for employment creation and productive activities for poverty alleviation.

7. To initiate, undertake and promote research activities directed towards poverty alleviation and employment generation; to establish and support research and training institutions; to grant stipends, scholarships, fellowships for such research activities; to organize seminars, workshops, conferences and to undertake publication of reports, periodicals, monographs, bulletins, journals, and books in furtherance of the objectives of PKSF.

8. To set up an effective Management Information System (MIS) for regular and proper monitoring and evaluation of the poverty alleviation activities of the POs supported by PKSF.

9. To establish and maintain contact and collaboration with POs, other institutions, bodies and societies in Bangladesh and abroad, including relevant international agencies and constituents of the UN system, interested in similar objectives; and to coordinate with such institutions, bodies and organizations for furthering the objectives of PKSF.

10. To undertake, sponsor, support or aid any educational, social, commercial, agricultural or industrial activity that contributes to the objectives of PKSF.

11. To conduct any other lawful activity that is conducive or incidental to furthering the growth and attainment of the objectives of PKSF.

OPERATIONAL STRATEGY

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

a) It does not directly lend money to the poor but rather reaches its target groups through its POs.

b) It provides greater thrust to institutional development.

c) It does not favor a particular model; but rather encourages innovations and various approaches based on experience.

LEGAL STRUCTURE

PKSF is a not-for-profit “company limited by guarantee” and is registered under the Companies Act of 1913/1994 with the Registrar of Joint Stock Companies. The legal structure of PKSF allows flexibility, authority and power to design and implement programs throughout the country and manage its affairs as an independent organization.

MANAGEMENT

PKSF has four divisions: (1) Small and Medium POs' Loan Operations Division; (2) Big POs' Loan Operations Division; (3) Administration; and (4) Audit Division. The Loan Operations Divisions are the program divisions of PKSF which select POs, disburse and recover loans, monitor and evaluate programs and provide on-site technical assistance and advisory services to POs. The internal audit division reports directly to the Managing Director.

PKSF has small research and training units to conduct research related to poverty alleviation and to impart training to the staff of POs. These units are under the Administration Division. The Finance Unit is under the Big POs' Loans Operations Division.

PKSF has, since inception, followed a recruitment policy of hiring officers with high academic standing. PKSF has programs to train its officers and staff to increase their efficiency and skills.

FUNCTIONS
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. CREDIT PROGRAM

(a) PKSF provides loanable funds and institutional support to 212* POs - 3 big, 196 small and medium and 8 Pre-PKSF - under its mainstream credit program as well as under some projects.

(b) PKSF's mainstream credit program includes four components: (1) Rural Microcredit; (2) Urban Microcredit; (3) Microenterprise Loan; and (4) Microcredit for the Hardcore Poor.

The projects under which credit funds were provided are: (1) Second Participatory Livestock Development Project (PLDP-II) funded by the Asian Development Bank (ADB); (2) Integrated Food Assisted Development Project (IFADEP) funded by the European Union (EU); (3) South-West Flood Damage Rehabilitation Loan Program (SRLP); (4) Financial Services for the Poorest (FSP) project; and (5) Micro-Finance Technical Support (MFTS) project funded by International Fund for Agricultural Development (IFAD).

(c) PKSF charges 4.5% service charge per year from its Organization Operating in Small Area (OOSA) category POs and 7% service charge per year from its Big Organizations Operating Large Area (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.

2. DEVELOPING BEST PRACTICES FOR THE MICROCREDIT SECTOR

PKSF has developed a number of policy guidelines and standards for its POs and for the microcredit sector, as well as in other areas. PKSF reviews its policies and programs continuously and adjusts them to meet the changing requirements of the sector.

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 microfinance program. The institutional development component includes training, on-site technical assistance, study visit at PKSF, loan for institutional development of POs, workshops/seminars, research program, and internship.

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

PKSF lobbies with the Government and other relevant organizations for ensuring appropriate policies and regulations in the microfinance sector. Significant progress has been made toward preparing a user-friendly regulatory framework for the country’s microfinance sector with substantial contribution from PKSF. PKSF is an important member of the Microfinance Research and Reference Unit (MRRU) set up by the Government for preparing a regulatory framework for the sector.

[Shamima Begum (centre), a microcredit borrower of Nowabenki Ganomukhi Foundation, a PO of PKSF, won the Global Microenterpreneurship Award 2005 sponsored by the United Nations. ]