A Short Overview Of PKSF

Palli Krama Sahayak Foundation

Tina S
Tina S
Mar 2, 2010
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In recent years, micro credit, in its wider dimension known as microfinance, has become a much favored intervention for poverty alleviation in the developing countries and least development countries.

There is scarcely a poor country and development oriented donor agency (multilateral, bilateral and private) not involved in the promotion (in one form or other) of a microfinance program. Many achievements are claimed about the impact of microfinance programs, and an outside observer can not but wonder at the range of diversity of the benefits claimed.

During the late 1970s, when the 'Jobra' experiment was underway under Professor M. Yunus, the Dheki Rin Prokolpa was initiated by the Bangladesh Bank in collaboration with the Swanirvar Bangladesh, and several other pilot schemes were initiated by a handful of the NGOs which were active then.

At that time, it was difficult to conceive that these initiatives would lead to a major microcredit movement, which would make Bangladesh known to the rest of the world. Even during the 1980s, in spite of Grameen Bank’s success, the main discourse amongst development practitioners in Bangladesh centered around the desirability of microcredit program as opposed to conscientization.
By 1990, unhindered experimentation in the fields led to a quiet resolution of the debate and the country experienced a massive expansion of microfinance activities during the 1990s. PKSF contributed significantly to the expansion of microcredit programs in Bangladesh. For instance, as of December 2003, PKSF loans constitute around 30 percent of ASA’s current revolving loan fund.

Microcredit programs (MCP) in Bangladesh are implemented by various formal financial institutions (nationalized commercial banks and specialized banks), specialized government organizations and semi-formal financial institutions (nearly 700 NGO-MFIs). The growth in the MFI sector, in terms of the number of MFI as well as total membership, was phenomenal during the 1990s and continues till today. The total coverage of MCP in Bangladesh is approximately 13 million households. Table-1 gives the coverage of major institutions in the formal and semi-formal sectors.

Apex Funding Organization

Palli Karma-Sahayak Foundation (PKSF), since its establishment in May 1990 by the Government, has been working as an apex microcredit and capacity building organization for eradicating poverty initially in the rural areas and subsequently in urban areas. The basic operational strategies of PKSF (Rural Employment Support Foundation) are the following:

* It does not directly lend money to the landless and the assetless people rather reaches its target groups through its Partner Organizations (POs);

* It provides greater thrust to institutional development, both its own capacity as an apex organization as well as the capacities of POs;

* It favors no particular model; instead, innovations and different approaches based on experience are encouraged;

* It acts as an advocate for appropriate policies and regulations useful for the micro credit sector.

Though instituted by the Government, 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 as an independent organization.


Since PKSF carries out its operations through various POs, therefore, 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 potential to operate a successful micro credit program for self-employment and income generation of those without land or assets. At present, PKSF provides loanable funds to its 206 POs–3 big, 195 small and medium and 8 Pre-PKSF POs – under its mainstream credit program as well as under some projects.

Some of the best practice lessons evident in the PKSF experience include:

* PKSF has been established and funded by the government, but it has been kept as an independent organization outside government bureaucracy. This has enabled PKSF to form .its own policies and develop its own management practices suitable for its activities.

* The outstanding quality of the Governing Body has contributed most in guiding the management and forming and revising policies whenever necessary.

* The policy of recruiting officials of above average quality has contributed greatly to the growth and performance of PKSF.

* PKSF has been successful in utilizing the capacities of local NGOs in quickly reaching the poor and developing the POs to deliver the financial services to the poor. Selection of the .right POs was the most crucial factor for PKSF's success.

* PKSF has created a congenial "micro credit culture" in Bangladesh by introducing several standards, norms and guidelines for operation of micro credit programs.

* PKSF's pragmatic policies and practices have made it the world's largest and most successful autonomous apex funding agency (wholesale fund) for micro credit and PKSF model is now being replicated in different countries of the world.

Microcredit Programs of Three Big NGO-MFIs

Bangladesh Rural Advancement Committee (BRAC)
ASA (Association for Social Advancement)


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.

Challenges and Development Plans

The overall strength of the MFIs in Bangladesh has been the key to PKSF’s success. An overestimation of the capacity to absorb funds by the MFIs on the ground is likely to lead to a failure of an apex body. Therefore a realistic assessment of the underlying retail capacity should be made by PKSF to offer many benefits such as the ability to screen MFIs on standard criteria and create a ‘
level playing field’.

PKSF's plan aims at substantially expanding the activities of PKSF by way of financing the diversified and expanded microcredit programmes of the POs, selecting new POs, and enhancing institutional capacity of the POs and PKSF. PKSF is considering expanding and diversifying its activities in the area of micro-enterprise and small enterprise, especially in the rural area.

Author's note: Ref: Palli Karma-Sahayak Foundation(PKSF) PKSF Bhaban, Plot: E-4/B,Agargaon Administrative Area, Sher-e-Bangla Nagar, Dhaka - 1207 Bangladesh.
Keywords: Palli Krama Sahayak Foundation,PKSF,microcredit,MFI,Bangladesh,Jobra,Md.Yunus,heki Rin Prokolpa,Swanirvar Bangladesh,ASA,prosika,rural,BRAC,NGO,microfinance,policies,credit sector.

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