Executive Summary

Livestock credit and Risk fund

The project started in the year 1996 and is now running profitably as limited company along with its livestock risk fund. A joint venture company of Grameen Fund and PBCL, named Palli Dushtha Bio Centre Limited (PBCL). It offers group members normally interested to invest in projects of poultry bird and milk cow rearing. Loan size and repayment system are designed to fit to the needs of the borrowers. The company’s clients borrowed on an average Tk.29, 095 with a range of Tk.10, 000 to100, 000. During its eight years of existence PBCL has served 1847 clients all having livestock projects. At present, there are 730 active clients in livestock projects and it is running with a loan outstanding of TK. 5,056,684. Major success in this company was the utilization of risk fund to cover treatment of livestock animals and birds along with coverage of loss due to death. Total 41 milch cow’s deaths have been compensated without loss in risk fund. A surplus of Tk.1, 300,000 was being created (Up to December 04) in risk fund after covering all costs, which include the cost of medicine and the cost of veterinary surgeons service. Contribution to risk fund, which was 5% of the borrowed amount, has been reduced to 3% without reducing any risk coverage benefits. Thus, Companies’ first unit has reached financial sustainability (FSS).   

Institutional development

PBCL a private limited company formed with authorized capital of 10 million taka has a social and economical development mission for serving vulnerable non-poor and the poor. At present, the company runs its business through three branches with 25 staffs directly involved in its field operation. It has well defined tiers of management both supporting and implementation unit. PBCL has decentralized management with well-developed Organogram indicating chain of command. It tries to provide a competitive salary and benefit package for its staff. PBCL has standard service rule and procedure for its staff members and its clients. Staff management, guided by the rules and procedures as set out in the guidelines, provides direction and indications about management function of the service providing team. PBCL is trying to develop a team based and participatory approach of management that seeks to focus on an organization’s effort on achieving results. Area Managers’ Team and Managers’ team and staffs’ team are the three different teams active in different tiers. These teams play vital role in decision making that are necessary to achieve results. The result based management system that focuses on the needs of clients are prepared by appropriate analysis, monitoring using result information and management decision. Its management increasing its knowledge through practical lessons learns and tries to identify and overcome the risks. New MIS and monitoring indicators for new products are in the process of development; computerized management system was in place and contentiously being developed.

Funding  

PBCL’s fund raising tactics has been pursued to have an access to commercial financial institution so that it is free from reliance on the whims of grant makers.  PBCL received no grant; however, it started with equity investment in the form of transferable share. The present equity share capital is formed by paid up capital of Tk. 3million, 70% of which came from investment of Grameen fund (Grameen Bank subsidiary) and 30% from DSK (national NGO). Grameen fund later on (May 2004) has sold its entire share to DSK and Founder Managing Director (Dr. Masudul Quader). The ownership now stands in the ratio of 80: 20 of DSK and MD. New investments later came as loan from DSK and would now come as loan from Commercial Banks. The savings of the members and revenue created by surplus income are also invested. The articles of the PBCL provide scope of investment in shares for the similar social development organizations that are interested in ventures like financing the projects for poor and vulnerable non-poor.    

Governance/Management

NGO’s funding agencies, and many other stakeholders are now paying increasing attention to limitations of NGO modality. Recognition of the limitations has resulted in the transformation of microfinance NGO in to regulated financial institution. In this context, the seven members Board of Directors (Board) representing shareholders are governing PBCL as a private limited company formed by NGO. The ownership structured with shareholders is being experimented so that balance between social mission and profitability/sustainability can be achieved. The Board provides policy guidance to Managing Director (MD) who looks after day-to-day administration and implements all activities in line with policy guideline laid by the board through Area Manager and Branch Mangers and other full time staffs. Six Board members (Directors) are nominated by Dushtha Shasthya Kendra (DSK) and are accountable to DSK’s executive committee. DSK can withdraw any Director and nominate another person from its General Body or EC members as and when required.