National Microfinance Study of Sri Lanka: Survey of Practices and ...

The demand for loans from this fund would increase dramatically if donors halted
grant in aid for such microfinance schemes and utilised their limited funding to
assist the ultra poor in areas of real need or for the essential ‘software’ training
and development services that are essential for the development and growth of
any economy.
The NDTF also provides funds for training and organises some limited training
for beneficiaries, however these are not of any high quality and the budgets are
severely limited.
However despite a certain amount of independence in operation, the NDTF is
managed by a government appointed Board of Directors who are mainly
government servants having little or no microfinance competence. The Chairman
and Managing Director are political appointments from the Finance Ministry with
no experience or back ground in micro finance and of course are open to ‘political
capture’.
Key staff members are on secondment from the Peoples Bank and the key
managers are Peoples Bank staff whose strengths are in loan issue and recovery
and not in building the micro finance abilities of its partners. The core strength of
the organisation is in issue and recovery of credit and not in strengthening
microfinance practices or the network of NGOs that could broaden the outreach to
give access to microfinance for the poor throughout Sri Lanka.
The NDTF needs to be completely changed and revitalised with a serious micro
finance capacity built in and an organisational ability to assist agencies in micro
finance development. This includes a need to overhaul all the structures and
systems and to ‘spin it away’ from government and party political control.
Though both JTF (NDTF) and PKSF in Bangladesh started in 1990/1991 with
similar support from World Bank the PKSF has become a serious micro finance
capacity building agency in addition to providing loans.
(PKSF) was formed in 1990 by the government of Bangladesh as a non-profit
Company under the Companies Act. PKSF is run as a private company outside
the ambit of government.
The Board has no current government servants in it and consists of people like
Prof. Yunis, founder of Grameen, Professors, Bankers, Social Workers and retired
distinguished senior government servants. The management of PKSK is kept
completely outside of government control with the Managing Director being
appointed by the Board and is competitively chosen on merit. In contrast, the
entire Board of Directors of NDTF is appointed by the government of Sri Lanka.
Human resources are considered the main strength of PKSF and it is known for
delivering high quality microfinance services. More importantly PKSF recruits its
staff based on merit and with very competitive reward packages, resulting in a
knowledgeable and skilled staff with above average academic qualifications that
become capable microfinance specialists through the use of specialist training
programmes.
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