INITIATIVES AND ACHIEVEMENTS IN MANAGING
DISASTER FOR MICRO FINANCE SECTOR: PUBLIC
SECTOR STEWARDSHIP OF PALLI KARMA
SHAHAYAK FOUNDATION IN BANGLADESH
Md. Nuruzzaman, Ph.D.
Director (Training)
National Academy for Planning and Development
INTRODUCTION
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Natural disasters have huge adverse effects on
development.
Over the years, as a disaster prone country,
Bangladesh has experienced a number of natural
disasters, such as floods, cyclones that caused a great
loss to Bangladesh in terms of human assets,
economic resources and livelihoods.
The flood in 1988 affected 52 districts and 30 million
people.
The flood in 1998 affected 55 of 64 districts and about
50 million people.
The cyclone SIDR in 2007 affected 30 districts in
coastal areas and about
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9 million people.
Damaged nearly 1.5 million houses
About 8000 km roads
About 5 thousand loss of human life; and
livestock about 1.7 million.
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MICRO FINANCE
AND
DISASTER
 On
the other hand, micro-finance
sector faces multifold crisis as a result
of natural disasters like
 loss of capital of clients and MFIs;
 loss of life and livelihood of clients
and staff members; and
 collapse of MFIs.
3
MICRO FINANCE PORTFOLIO
IN
BANGLADESH
According to CDF statistics there were around
1410 microfinance institutes in Bangladesh.
 Up to December 2010, cumulative disbursements
by 772 MFIs were Tk. 1508.82 billion.
 The amount was invested by the 41.24 million
active members for the development of
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agriculture
cottage industry
small business
transport
health, education and housing etc. (Microfinance
Statistics, 2011).
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ORGANIZATION AND MANAGEMENT OF PKSF
Palli Karma Shayak Foundation (PKSF) is an apex
financial institution established in 1994 by the
government of Bangladesh in order to create
employment opportunities in the rural areas
through providing micro-credit.
 It is managed by highly qualified professional and
development practitioners through a Governing
Body and a General Body.
 General body provides operational guidelines and
executive body look after day to day business of
PKSF.
 PKSF gained a unique strength for executing its
diversified activities with the wide network which
is conducted through its POs.
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
CONTD…
Most of the districts in the country are
covered by the POs of PKSF reaching 262 in
numbers in FY 2009-10.
 Field operation of PKSF is based on the members
of the POs.
 The total number of members in FY 2009-10
was 10.96 million
 Total number of borrowers are 8.39 million, as
of FY 2009-10
 Among the borrowers,
number
of
women
borrower is significant i.e., 7.72 million(92%)
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COND….
The potentiality of PKSF is evident through
the progressive trend of loan disbursement
over the decades.
 The flow of loan disbursement from PKSF-PO
in FY 2009-10 was BDT 19.41 billion
 In case of flow from PO to beneficiaries it is BDT
96.76 billion in FY 2009-10
 Excluding Institutional Loan, the Loan
Outstanding for PKSF in FY 2009-10 was BDT
31.63 billion
 Similarly, POs' Loan outstanding in FY 2009-10
was BDT 55.99 billion exclusive of Institutional
Loan.
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KEY RESULTS IN MANAGING DISASTER
MICRO SECTOR BY PKSF
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Disaster Management Fund:
PKSF provides the funds to its eligible POs, operating in
designated vulnerable areas for supporting to disaster
beneficiaries
PKSF provides loan to POs at the interest rate of O.5% per
annum and a repayment period of 24 months in two yearly
installments.
The POs assess the
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FOR
Needs of the affected or vulnerable families and
Provide loans for disaster preparedness and post-disaster rehabilitation
Follow the guidelines and terms and conditions.
The POs disburse the Disaster Management Fund (DMF) to
borrowers at a rate of maximum 4-0 percent and with the
typical loan term between 12 to 24 months.
POs on-lend to their beneficiaries and recover the funds which
was remitted back to PKSF for revolving in subsequent years.
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Disaster management Product and Services of PKSF at a Glance
Program/Project
Project/
Programs Objective
Project
Implementation
Start
Disaster Management Fund
( DMF)
Operating
vulnerable 1998
areas
to
support
disaster beneficiaries
Socio-economic Rehabilitation Rehabilitation of Flood
Loan Program (SRLP)
2007.affected members
Livelihood
Program (LRP)
June
,2000
Restoration Rehabilitation
of
Monga/flood/man
made
disaster affected members
Rehabilitation of SIDR
Affected Coastal Fisheries
Small Business and Livestock
Enterprise (RESCUE)
End
Budget (up
to)October,2009
Service Charge
Allo
cation
PO
Expe
nditure
Bene
ficiaries
Size
of
Loan
(Tk)
Continu 8 Crore
ed
0.5%
4%
5000
June
,2004
1.5%
4.5%
3000
0.5%
4%
3000
1 Year
10
ml
US$( Tk
70cr)
Providing credit to restart Nov
income
generating 2007
activities
and
selfemployment opportunities
of the cyclone affected
members
Conti
nued
130
Crore
Taka
108
Crore
1%
4%
Up to
1,50,000
Special Assistance for
Providing financial support Nov
Housing of SIDR Affected for
repairing
or 2007
Borrowers
construction house
Sep
2008
50
Cr
34
Crore
0%
0%
Highest
15,000/=
Emergency
2007,
Flood Rehabilitation
of Nov
Restoration and Recovery Monga/flood/man
made 2008
Assistance (EFRRAP)
disaster affected members
Dec
2010
15 ml
US$
67.75
Crore
0.5%
4%
5,000/=
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DMF
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100 POs have organized a total of 203,946 members
under this EFRRAP-DMF program.
Most of them were affected by the 2007 flood and
benefited directly by soft loans.
Besides these, some other disaster-affected members
were also targeted for livelihood restoration, postdisaster rehabilitation and disaster preparedness.
Up to September 2010, PKSF has disbursed an
amount of Tk. 97.95 crore (90%) to its POs, whereas
POs have disbursed Tk.90.37 crore to the floodaffected members.
Out of the total fund disbursement, disaster
preparedness holds the highest share (43.0%)
followed by the livelihood restoration (30.0%) and 10
post disaster rehabilitation (28.0%) respectively.
CONTD…
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Out of 203,946 members,
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41% (83,865) used their loans in house repairing
purposes.
18%members (36,973) used loans for
reconstruction/repairing of latrines
17 %members (34,357) for reconstruction/repairing
tube-well ;and
15% (30,516) for buying productive assets and start
their business; and
9% (18,235) for buying emergency food and medicine
The recovery rate of this disaster management
loan is 1OO% both at PKSF-PO and PObeneficiary levels
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CONTD…
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Key factors for measuring success of the program
are:
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The program provides a very easy and soft loan in
terms of interest rate and payment mode for the
flood-affected beneficiaries;
Helps in smoothing the other loan programs provided
by the POs;
Assisted beneficiaries for repairing and reconstructing
tube-wells, latrines and houses which ensures a
minimum standard of sanitation at grass-root level;
No savings and extra change (for deposit book and
others) for beneficiaries to have this loan; and
Consciousness regarding disaster preparedness has 12
been increased at member’s level.
ALTERNATIVE LIVELIHOOD TRAINING
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In most cases, disasters disrupt usual livelihoods of the
clients.
Adoption of alternative livelihood measures need
diversified trainings to develop alternative skills.
Under the Integrated Initiative to Monga Reduction,
PKSF organized training courses on non-farming
activities such as:
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goat and cow rearing;
beef fattening;
tailoring, craft works;
homestead gardening;
fish cultivation;
nursery so that the clients can take alternative livelihood
after disaster.
After completion of the training, micro credit is
provided to trainees to undertake income generating
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activities based on their gained skills.
INTEREST FREE, SOFT, FLEXIBLE LOANS
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PKSF has provided soft term loans for
reconstruction/rehabilitation of housing and on
and off-farm income generating activities under
 Southwest Flood Damage Rehabilitation Project
(SFDRP) after the flood-2000.
 ‘Special Assistance for Housing’ (SAHOS)
 Rehabilitation of SIDR affected Coastal Fishery,
Small Business & Livestock Enterprises
(RESCUE) in 2007
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CONTD…
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Some features of the products are:
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Dividing disaster affected areas in three categories
such as
severely affected areas;
 medium affected areas; and
 less affected areas.
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Borrowers of severely affected areas got priority in
receiving credit;
Amount of credit for marginal farmers, shrimp
cultivators and small business is allowed to receive upto Tk. 15,000 and the fishing community is allowed
loan up-to Tk. 1,50,000; and
The borrowers already received credit was further
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allowed to receive credit again.
ASSETS BUILDING
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As a recovery measure, many MFIs adopt asset
building arrangements to face disaster situation in
terms of accumulation of fixed assets and
development of human resource.
In this regard, under the Sammridi (Prosper) Program,
PKSF provides micro-credit to the clients of the
disaster prone-areas especially flood-prone areas for
the purpose of
buying land,
 taking leasing of land; and
 installation of solar light so that they can cope with disaster.
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In case of lease of land in the Char areas, a borrower
can take upto Tk. 25000 at 20 percent interest rate for
a period of 1 year with flexible installments/repayment
schedule.
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STEWARDSHIP
OF
PKSF
AND
WAY FORWARD
Natural disasters create vulnerability for both
MFIs and their clients.
 Sustainable microfinance program depends how
MFIs are effectively delivering products and
services to their clients.
 As an apex micro finance organization in public
sector, PKSF has developed and experimented
unique product and services for managing
disaster for micro finance sector in Bangladesh.
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CONTD..
Products and services developed by PKSF based
on the experiences of different disasters have
been widely used by PKSF partner organizations
and MF sector in Bangladesh.
 Stewardship of PKSF as public sector organization
in managing disaster based on product and
services designed, experimented and developed
and experiences of managing different disasters
could be adopted/replicated in making effective
disaster management policy and strategies for
micro finance sector level as well as national level
in Bangladesh.
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