The Contribution of Palli Karma-Sahayak Foundation (PKSF) to Microfinance Development in Bangladesh.

This research article was submitted as a partial requirement for the degree of Master of International and Community Development (MICD). I did a supervised research on The Contribution of ‘Palli Karma Sahayak Foundation’ (‘Rural Employment Assistance Foundation’), PKSF, to Microfinance Development in Bangladesh”. It was 2 credit points course. That course was assessed by an assignment of equivalent totaling 15,000 words. The main objective of that study was to find PKSF’s potential expanding microfinance in Bangladesh under the active supervision of Government of Bangladesh, but not as a formal Government agency. That was an empirical study based on secondary sources of data. But the practical working experience with PKSF for the last 6 years has given extra benefits to the researcher to analyze the issue from a practical perspective. The researcher was very much familiar with the issues have discussed in this study. For updates, telephonic and e-mail conversations have also done during times of research.  The study reveals that PKSF is an apex funding agency, empowered to channel microcredit funds to its Partner Organizations (POs), i.e. Micro Finance Institutions like NGOs, Banks, Cooperatives, etc, for on-lending to the rural poor, especially to the women, for poverty alleviation through the creation of self-employment opportunities. PKSF has a role in MFI capacity building to promote financially viable partner MFIs in Bangladesh.  This goal is core to PKSF’s mission to ensure that the funds it distributes are used in ways, which it expects its partner organizations to achieve. Within ten years of establishment, PKSF has a remarkable success the scaling up the microfinance operation in Bangladesh formulating some innovative operational modalities, establishing some organizational behavior, handling stakeholders efficiently, and creating a favorable environment to deliver microfinance to the poor through POs. Though some studies would like to caution the policymakers based on some empirical study that current enthusiasm about the political contribution of domestic apex mechanisms to progress in microfinance is not warranted. In contrast, the policymakers and academics that a number of reasons to support the creation of government sponsor apex financing organization like PKSF in Bangladesh also argue it. Both the reluctance of commercial banks and the continuously increasing demand for wholesale loans from the MFIs opened the opportunity for organizations like PKSF to respond in part to the development of the microfinance sector as the wholesale financial organizations for the MFIs. Moreover, the absence of a formal framework for MFIs is a major obstacle for the government to uphold the interest of poor borrowers. But after establishing PKSF, Government has achieved a remarkable result in stabilizing this sector by formulating some policies and has so far some informal regulation on MFIs, at least PKSF POs, which constitute more than two-thirds of the whole sector in terms of membership and loan outstanding to the borrowers. Although it may be too early for clear-cut evaluation about PKSF success, it is appropriate to recognize a number of issues, which led it to be an attractive wholesale financing organization in Bangladesh as well as other parts of the World as some countries are already showing their keen interest to replicate their PKSF’s ideas in their countries. I have given the particulars of the study, which was completed in 2004. 

Name of Degree : Master of International and Community Development (MICD)

Name of University : Deakin University, Melbourne, Australia

Nature of Study : Supervised Research, 2 Credit Points, AID 721

Name of Supervisor: Professor Joe Remenyi, PhD.