Activities of PKSF

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 by these organizations. In order to achieve the objective of sustainability, PKSF performs the major functions expected of an apex organization. These include, among others:

a)                  Provision of loanable funds to MFIs

b)                  Developing best practices for microcredit management and operations of MFIs

c)                  Institution/capacity building support to MFIs

d)                  Lobbying for appropriate policies and regulations useful for the expansion of microfinance sector

Organizational Structure and Membership of PKSF

Organizational Structure and Membership

6.1            General Body

Maximum number of the members in the General Body will be 25, out of which government may nominate not more than 15 members from amongst persons associated with government agencies, voluntary organizations 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. 

6.2            Governing Body

The composition of the Governing Body is as follows: (i) Chairman of PKSF (nominated by the Government), (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.

6.3            Chairman

The Chairman of PKSF is nominated by the Government from persons not in service of the Republic, usually for a term of three years.

6.4            Managing Director

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

6.5            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 program divisions of PKSF that select POs, disburse and recover loan, 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 a  research and a 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.

PKSF from its inception has been following a policy of recruiting officers with high academic standing. PKSF has Programs to train its Officers and Staff to increase their efficiency and skill.

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 organizations, foreign governments, international donors and lending agencies and capital markets.

So far PKSF has received funds from the GOB, the IDA/World Bank, USAID and ADB.

Operational and Legal Strategy of PKSF

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

a)   It does not directly lend money to the landless and the asset less people rather reaches its target groups through its POs, the delivery mechanism for reaching the poor.

b)   It provides greater thrust to institutional development.

a)      It favors no particular model; instead innovations and different approaches based on experience are encouraged.

Legal Structure of PKSF

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 programs and implement them throughout the country and managing its affairs.

Objectives of PKSF

PKSF was set up in 1990 by the Government of Bangladesh with an overall objective of alleviating poverty and improving the quality of life of the rural poor – the landless and the assetless people by providing them with resources for creation of employment for enhancing economic conditions. The major specific objectives of PKSF are:

a)      to provide various types of financial help and assistance to non-government, semi-government, and government organizations voluntary agencies and groups, societies and local government bodies, so that, as Partner Organizations (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 program in a sustainable manner.  

THE SETTING UP OF PKSF

With the success of Grameen Bank’s program many large NGOs in Bangladesh introduced microcredit program for their target groups. Smaller NGOs followed the same path. But the smaller NGOs lacked adequate financial support for their microcredit program. However, there were not many donors ready to come up with funds for microcredit programs for these small, locally based NGOs. At the same time, for those which received some support there was no guarantee about the continuity of donor funds. However, NGOs had gradually acquired some skill and organizational strength to organize local poor people and to extend financial services to them. In this context, GOB set up the Palli Karma Sahayak Foundation (PKSF) in May 1990 as an apex organization to provide loans to the NGOs which in turn would provide collateral free credit to their poor members and to provide advisory services and training to NGOs for enhancing their institutional capacity. PKSF, set up as a “company not for profit” by the government is unique in its character and operations.

Modern Micriocredit:

The origins of microcredit in its accepted applied apotheosis can be affiliated to several organizations founded in Bangladesh, abnormally the Grameen Bank.The Grameen Bank, which is about advised the aboriginal avant-garde microcredit institution, was founded in 1976 by Muhammad Yunus. Yunus began the activity in a baby boondocks alleged Jobra, application his own money to bear baby loans at low-interest ante to the rural poor. Grameen Coffer was followed by organizations such as BRAC in 1972 and ASA in 1978.Microcredit accomplished Latin America with the enactment of PRODEM in Bolivia in 1986; a coffer that after adapted into the for-profit BancoSol. Microcredit bound became a accepted apparatus for bread-and-butter development, with hundreds of institutions arising throughout the third world. Though the Grameen Coffer was formed initially as a non-profit alignment abased aloft government subsidies, it after became a accumulated article and was renamed Grameen II in 2002. Muhammad Yunus was awarded the Nobel Peace Prize in 2006 for his plan accouterment microcredit casework to the poor.