Palli Karma Sahayak Foundation (PKSF) since its inception in May 1990 has been working as an apex microcredit funding and capacity building organisation for eradicating poverty by providing microcredit to the poor through its Partner Organisations (POs). PKSF, in English, means “Rural Employment Support Foundation”. However, PKSF has expanded its operation to urban areas also.

Vision and Objectives

PKSF’s vision is to alleviate poverty and improve the quality of life of the poor – the landless and the assetless people by providing them with resources for creation of employment for enhancing economic conditions. The major objectives of PKSF are:

a) To provide various types of financial help and assistance to non-government, semi-government and government organisations, voluntary agencies and groups, societies and local government bodies, so that, as POs and in consistence with the PKSF’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.

b) To assist in strengthening the institutional capacity of POs, so that they can manage their programme in a sustainable manner.

Operational Strategy

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

a) PKSF reaches its target groups – the landless and the assetless people – through its POs, it does not directly lend money to its target people.

b) It provides greater thrust to institutional development to both PKSF and its POs.

c) It favours no particular model; instead, innovations and different approaches based on experience are encouraged.

Legal Structure

Legally PKSF is a “company limited by guarantee” meaning “company not for profit” 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 take programmes and implement them throughout the country and managing its affairs as an independent organisation.

Funding of PKSF

PKSF mandate authorizes PKSF management to mobilize funds in the forms of grants, loans and contributions from a wide variety of sources which include the Government of Bangladesh (GOB), private individuals and organisations, foreign governments, international donors and lending agencies and capital markets.
So far PKSF has received funds from the GOB, the IDA/World Bank, the USAID, the Asian Development Bank (ADB) and the International Fund for Agricultural Development (IFAD).

Organisation Structure

General Body

[PKSF’s Annual General Meeting presided over by Dr. Wahiduddin Mahmud, Chairman, PKSF]

Maximum number of members in the General Body will be 25, out of which GOB may nominate not more than 15 members from amongst persons associated with the government agencies, voluntary organisations or private individuals. The remaining 10 members may be from amongst persons representing POs and/or private individuals. The General Body usually meets once a year for overall policy guidance. Presently, PKSF has a General Body of 16 members consisting of distinguished personalities of the country.

Governing Body

The composition of the Governing Body is as follows: (i) Chairman of PKSF (nominated by GOB), (ii) the Managing Director (appointed by the Governing Body), (iii) two members nominated by the Government; and (iv) three members elected by the General Body. That makes a 7-member Governing Body of PKSF. The present Governing Body comprises persons of national and international repute.

[Governing Body meeting of PKSF presided over by Dr. Wahiduddin Mahmud]

Chairman

The Chairman of PKSF is nominated by GOB from persons not in service of the Republic. The present Chairman is a leading economist and a Professor of Economics at Dhaka University.

Managing Director

The Managing Director is the Chief Executive Officer (CEO) of PKSF. The Governing Body has appointed the present Managing Director. He is the ex-officio member of the Governing Body.

Management

PKSF has four divisions as follows: (a) Small and Medium POs’ Loan Operations Division; (b) Big POs’ Loan Operations Division; (c) Administration Division; and (d) Audit Division. Loan Operations Divisions are the programme divisions of PKSF, which select POs, disburse and recover loan, monitor and evaluate programmes and provide on-site technical assistance and advisory services to POs. The Internal Audit Division reports directly to the Managing Director. PKSF’s Finance Department operates under the Big POs’ Loan Operations Division.

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.

Functions

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

Provision of microcredit funds to POs

Developing best practices for the microcredit sector

Institution/capacity building support to POs

Advocacy for appropriate policies and regulations useful for the microcredit sector

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; Micro-enterprise credit and Microcredit for the Hardcore Poor. PKSF gives special emphasis on microenterprise development with the goal of making microcredit more growth-oriented.

[Microcredit borrowers workingin a nursery]

[A borrower is seen ploughing withpower tiller]

PKSF also implements a number of projects under which credit funds are provided to POs. These are (i) Financial Services for the Poorest (FSP) project (ii) Micro Finance and Technical Support (MFTS) project; (iii) Socio-economic Rehabilitation Loan Project (SRLP); (iv) Participatory Livestock Development Project (PLDP); (v) Integrated Food Assisted Development Project (IFADEP); (vi) Sundarban Biodiversity Conservation Project (SBCP); and (vii) Jamuna Multipurpose Bridge Authority Project (JMBA).

Features of PKSF Credit Programme

a) PKSF provides loans to three categories of POs – Organisations Operating in Small Areas (OOSA); Big Partner Organisations Operating in Large Areas (BIPOOL); and Pre-PKSF POs.

b) PKSF funds four categories of microcredit programmes of its POs under its mainstream credit programme; (i) Rural microcredit (ii) Urban microcredit, (iii) Micro-enterprise credit; and (iv) Microcredit for the hardcore poor.

c) PKSF charges 4.5% service charge per year from its OOSA and Pre-PKSF category POs and 7% service charge per year from its BIPOOL category POs.

d) Loans received by OOSA and Pre-PKSF category POs from PKSF are repayable within a period of 3 years. First 6 months are considered as a grace period and loans along with service charge are to be repaid in 10 quarterly installments within the rest 30 months.

e) Loans received by BIPOOL category POs are payable in 4 years in 12 equal installments with a grace period of 12 months.

Summary of PKSF’s Credit Programme (As of September 2004)

Selecting Partner Organisations

PKSF carries out its operations through various POs, therefore, selection of POs 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 organisations, 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 organisation, PKSF follows a clear guideline which can be divided into the following areas: (1) Organisation; (2) Organiser; (3) Management; (4) Human Resources; (5) Working Area; (6) Field Activities; (7) Past performance; (8) Management Information System (MIS) and (9) Accounting System.

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 programs continuously and adjusts them to meet the changing requirements. PKSF has a program to develop standards in further areas. Major policy guidelines and standards prepared by PKSF are:

1) Guidelines for selection of POs and borrowers for Rural, Urban, Hardcore poor and Micro-enterprise;
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) Guideline for Management of Savings;
6) Guideline for Management of Service Charge Earnings;
7) Guideline for Avoiding Overlapping;
8) Management Information System (MIS);
9) Guideline for Setting Performance Standards and Categorization of POs;
10) Financial Ratio Analysis;
11) Policy for the Utilization of Disaster Management Fund;
12) Guideline 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 Auditors of PKSF for Auditing PKSF;
17) Audit TOR for External Auditors 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.

Accounting and Auditing Systems

PKSF gives priority to develop a sound accounting and auditing system for PKSF and its POs. PKSF’s accounting system and policies are in conformity with the International Standard which has been re-affirmed through a recent evaluation by an independent chartered accounting firm. PKSF’s financial transactions are now pre-audited by the internal audit team.

Institution and 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, absorption capacity of the POs, supervision and monitoring, financial management and control, personnel policy including human resource development (HRD), sustainability of micro-credit programme, etc. The institutional development components include the following:

Training

Training activities aim at developing the capacity of PKSF officials as well as POs credit personnel. PKSF’s training wing conducts highly customized training courses at PKSF training centre. The other courses are outsourced to training institutes belonging to both public and private sectors of the country following the training plan incorporated in the yearly training calendar.

Training Modules

Training programmes implemented by PKSF are operation based rather than theoretical that covers a wide range of subjects. PKSF has developed 22 training modules out of which 7 are for PKSF staff and 15 for POs staff. The modules have been prepared based on a Training Need Assessment (TNA).

Training Modules for POs Staff:

Training Modules for PKSF Staff:

PKSF also regularly organises inter-PO study visits/experience-sharing programmes for its POs and conducts ‘on the spot training’ (quick, need-based, in-situ) for the POs staff with a view to strengthening POs’ capacity.

On-site Technical Assistance

PKSF officers, during their regular intensive field visits for on-site monitoring of the POs’ programmes, provide the POs advice on different aspects of management and operations of their microcredit programmes. This on-site technical assistance has been found very effective in improving the efficiency of POs’ programmes.

Training for External Organisations

PKSF also conducts training for domestic and foreign organisations, which are not POs of PKSF but have microcredit activities.

Study Visit at PKSF

[Mr. Md. Mosharrf Hossain Khan, DMD (4th from left) and other high level officials of PKSF with team leader Mr. S. K. Mitra, Executive Director, NABARD (3rd from left), Mr. K. M. Mishra, Chairman, Etah Grameen Bank (4th from right) and other participants of the study visit team.]

[The team members of NDTF, Srilanka are sharing experiences with Dr. M. A. Hakim, General Manager (Administration), PKSF]

PKSF’s performance as an apex microcredit funding organisation has attracted the attention of policymakers, professionals and practitioners of microcredit at home and abroad. PKSF model is now being replicated in countries of Asia, Latin America, and Africa. PKSF attracts many organisations and personalities from different countries, who often visit PKSF to share their experience and expertise.

[Dr. Salehuddin Ahmed, Managing Director and other high officials of PKSF are exchanging views with the Chief Executives of Partner Organizations]

Loan for Institutional Development of POs

PKSF is implementing a loan programme for its POs’ capacity enhancement since 1997. PKSF gives subsidized loan (at 1-% service charge rate) to its POs to buy computers, motorcycles, bicycles, engine boats, and photocopiers. PKSF also provides soft-loan (at 1-% service charge rate) to construct office-cum-training centre of its POs. The recovery rate of ID loan is almost 100%.

[Dr. Salehuddin Ahmed, Managing Director, PKSF distributing certificates among participants of the workshop for people interested to work in microcredit]

Workshops/Seminars

PKSF regularly organizes workshops/seminars on various pertinent issues to strengthen microcredit operations of its POs.
PKSF has organised an international seminar titled “Attacking Poverty with Microcredit” on January 8-9, 2003. Around 300 participants including policy makers, practitioners and researchers from home and abroad attended the seminar. Papers presented in the seminar has been printed in a book published by the University Press Limited (UPL), Dhaka.

Research Programme

PKSF gives much importance to research for institutional development. The objective of research program is to strengthen and support the microcredit program of PKSF and its POs. To guide its research program PKSF has formed a “Research Advisory Committee” consisting of outstanding economists and researchers of the country. Bangladesh Institute of Development Studies (BIDS) has recently completed a four-year (1997-2000) comprehensive monitoring and evaluation study (MES) on POs of PKSF. Under the extended research program of Second Poverty Alleviation Project, PKSF has selected a few more issues for study.

Internship

PKSF accepts interns from home and abroad regularly. During their internship they undertake studies on issues related to microfinance programmes of PKSF and its POs.

Advocacy for Appropriate Policies and Regulations of the Microcredit Sector

PKSF lobbies with the Government and other relevant organisations for ensuring appropriate policies and regulations in the microcredit sector of the country. Significant progress has been made toward preparing a user-friendly regulatory framework for the country’s microcredit 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 microfianance regulatory framework.

Other Areas of Contribution

Besides the above, PKSF is also making contribution in the following areas:

Computerization of POs’ MIS and Accounts System

PKSF has developed two separate software titled “PO Management Information System (PO MIS)” and “PO Financial Management System (PO FMS)” using Oracle 8i and Developer 2000. Both software have been tested at PO level and will be gradually implemented in all POs soon.

Credit Bureau Database

PKSF, as the leader of the microcredit sector, has started to build up a Credit Bureau Database containing selected information of all microcredit institutions of the country. The database will have information up to the borrowers level.

Maps on Microcredit Coverage

PKSF has also prepared ‘Maps on Microcredit Coverage in Bangladesh’ showing in maps and tables district-wise coverage of microcredit programme in Bangladesh. The effort, the first of its kind in Bangladesh, is expected to contribute to the process of policy making and taking initiatives for further consolidation of the country’s microcredit sector. PKSF is updating the maps to include upzila-wise information.

Disaster Coping Strategy

PKSF has provided Tk. 10 million to its POs as grant for the creation of a Disaster Management Fund (DMF) by each PO. Each PO also contributes a portion of their service charge earnings to this fund following DMF policy developed by PKSF. This fund is to be used for strengthening the disaster-coping ability of microcredit clients through out the country. PKSF is also implementing the “Socio-economic Rehabilitation Programme (SRLP)” covering the flood-affected poor of the southwest part of the country with the financial assistance from GOB and ADB.

PKSF and Gender Equality

PKSF since its very inception recognized the fact that without the active participation of women who constitute 50% of the country's population, microcredit programme would not be able to achieve its objectives. So, PKSF encouraged its partners to target their microcredit programmes to include mainly the women. Today, more than 90% of the beneficiaries of microcredit programmes of its partners are women. PKSF is, thus, playing an important role in empowerment of women.

Technical Assistance

PKSF provides advisory/technical services to the government and non-government organizations to implement their development programmes.

Microcredit Programme Funding Policy for Indigenous Ethnic Minorities

PKSF has prepared a manual describing PKSF’s policy and procedures for microcredit operation that affect indigenous and ethnic minorities. The manual provides policy guidance to ensure that indigenous people benefit from microcredit.

GO-NGO Partnership

PKSF has very successfully established and developed GO-NGO collaboration in the field of poverty alleviation through the provision of microcredit. This successful model of GO-NGO collaboration can be followed in other relevant sectors also.

Asia Pacific Region Microcredit Summit (APRMS) 2004

Palli karma-Sahayak Foundation in collaboration with the Microcredit Summit Campaign organizaed the 2004 Asia-pacific Region Microcredit Summit Meeting of Councils (APRMS) in Dhaka, Bangladesh during 16-19 February 2004. More than 1200 participants from 47 countries attended the Meeting, Which turned out to be the biggest ever Regional Meeting on microcredit. This Summit Meeting in Dhaka provided inputs for program of the UN International Year of Microcredit 2005. The Meeting was also important in the context of Millennium development Goals, especially that of cutting absolute poverty by half by 2015.

IMPACT OF PKSF MICROCREDIT PROGRAMME

The microcredit programme of PKSF implemented through its POs has benefited the poor in more than one way. The programme has improved their subsistence through diversification and strengthening of their survival strategies; enhanced their security giving them access to assets and rights and augmented their self-respect providing them choice and independence. With microcredit, the poor households now own and command assets and savings, which they can cash or use to meet contingencies without having to sacrifice their independence, security and peace of mind by getting into debt.

Facilities Available at PKSF Bhaban

Auditorium and Conference Rooms
The Auditorium equipped with modern facilities is designed for conference/meeting and other programmes for 250-plus participants. The conference room-1 attached to the auditorium with a capacity of 80 participants also can be used for conducting seminars/meetings. The conference room-2 has a capacity of 60 participants and there are sufficient modern facilities for conducting workshop/seminars/meeting. These venues are supported by un-interrupted power supply round the clock.

A nearby spacious dining hall supports the auditorium and conference halls. Arrangement of modern equipment such as multi-media projector, overhead projector, TV, camera, cordless microphone set etc. can be made on request.

PKSF’s auditorium, conference rooms, training facilities can be used by national and international organisations paying rents/prices.

Library

PKSF has a library specialized on poverty alleviation and microcredit so that PKSF staff members can keep themselves updated about the latest development in these areas. Besides the staff, researchers and scholars interested in poverty alleviation and microcredit also use PKSF library.

Computer Lab

A computer lab, consisting of 12 latest Compaq Pentium IV computers and a multi-media projector, has been established in PKSF. This facilitates training on PO MIS and PO FMS to both PKSF and POs personnel.

Training facilities at PKSF Bhaban

PKSF has a 5-storeyed training center attached to the main building. For residential training courses, there is moderate accommodation up to 28 trainees at a time. The capacity for non-residential training is up to 40 persons at a time. Various modern training equipment viz. multi-media projector, overhead projector, slide projector, TV, video camera, photographic facilities, etc. are used to conduct the training effectively.

Members of the Present General Body

Chairman

Dr. Wahiduddin Mahmud
Professor Department of Economics, University of Dhaka, Dhaka

Managing Director

Dr. Salehuddin Ahmed Managing Director

Member

1.Professor Muhammad Yunus Member
Managing Director
Grameen Bank
Mirpur-2, Dhaka

2. Begum Tahrunnesa Abdullah Member
Social Worker and
Magasaysay Award Winner

3. Dr. Iqbal Mahmud Member
Professor (Emeritus)
Department of Chemical Engineering
Bangladesh University of Engineering and Technology (BUET)
Dhaka

4. Begum Rokia A. Rahman
Chairperson & Managing Director, R.R.Cold Storage Ltd.,Red
Crescent Concord Tower, Suite B-17 (11th Floor), Mohakhali, Dhaka

5. Mr. Muhammad A. (Rumee) Ali Member
Deputy Governor
Bangladesh Bank, Head Office
Motijheel C/A, Dhaka

6. Mr. Badiur Rahman Member
Member
Planning Commission, Ministry of Planning
Government of Bangladesh
Sher-e-Bangla Nagar, Dhaka

7 . Begum Rokeya Member
Executive Director
Sabalamby Unnayan Samity (SUS)
Netrokona, Bangladesh

8. Janab Hedeyatul Islam Chowdhury
Secretary, Rural Development & Cooperative Division
Ministry of Local Government Rural Development & Cooperatives,
Government of Bangladesh

9. Dr. Nazmunnesa Mahtab Member
Professor
Department of Public Administration
University of Dhaka
Dhaka

10. Begum Rasheda K. Choudhury Member
Director
Campaign for Popular Education (CAMPE)
5/14, Humayun Road, Mohammadpur
Dhaka

11. Janab A. A. Qureshi Member
Ex-Managing Director, Grameen Fund and
Bank of Small Industries &
Commerce Bangladesh Ltd., Dhaka

12.Begum Rehana Parveen
Director, Shaplaful, Dosani, Bagerhat

13. Dr. Hossain Zillur Rahman Member
Executive Chairman
Power and Participation Research Centre (PPRC)
House # 79 (3rd Floor), Road # 12A
Dhanmondi, Dhaka-1209

14. Dr. Ahmed Kamal Member
Professor
Department of History
University of Dhaka
Dhaka

Members of the Present Governing Body

Chairman

Dr. Wahiduddin Mahmud
Professor Department of Economics,
University of Dhaka, Dhaka

Managing Director

Dr. Salehuddin Ahmed

Member:

1 . Professor Muhammad Yunus Member
Managing Director
Grameen Bank, Mirpur-2, Dhaka

2. Dr. Nazmunnesa Mahtab Member
Professor
Department of Public Administration
Dhaka University
Dhaka

3. Begum Tahrunnesa Abdullah Member
Social Worker and
Magasaysay Award Winner

4. Dr. Iqbal Mahmud Member
Professor (Emeritus)
Department of Chemical Engineering
BUET, Dhaka

5. Mr. Muhammad A. (Rumee) Ali Member
Deputy Governor
Bangladesh Bank
Head Office
Motijheel C/A, Dhaka

Those interested to use PKSF facilities may contact Manager (Admin) and Manager (Training) of PKSF.
Interested organisations may contact PKSF office to get details about eligibility criteria, loan application form and other information related to management and operation of PKSF.

JANUARY 2005

Palli Karma-Sahayak Foundation (PKSF)
Plot No.-E-4/B, Agargaon Administrative Area
Shre-e-Bangla Nagar, Dhaka-1207, Bangladesh
Telephone: 880-2-9126240-43, 9140056-59
Fax: 880-2-9126244, E-mail: pksf@pksf-bd.org
Web: www.pksf-bd.org