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

The FCSs were developed the following year with 9 FCSs receiving funding
between February and October 1999. In Jaffna, the project selected 18 FCSs. In
the Wanni, the project appears to be working with 6 NGOs.
A second phase of activity began in Jaffna in Late 1998 with the project deciding
to create women’s savings and credit groups using existing BIG (bio-intensive
gardens) outreach then expanding elsewhere within the project. Nine groups were
started in Jaffna 1999 and three in Batticaloa.
In 2000 three more groups were created in Batticaloa and five were created in the
Wanni. In 2001 another four groups were created in Batticaloa, three in the Wanni
and three in Jaffna. As of December 2001, the FSP had provided microfinance
services through 10 NGOs, 27 FCS and 28 S&C groups. The grant given to these
organisations totals approx. 20 million rupees.
UNHCR funded Micro Projects were initiated with NGOs, Fishing Society
Cooperatives (FCSs) and some CBOs in the Wanni in 1994. Over the period
1994 to 2000 Revolving Loan Funds (RLF) were developed in 49 NGOs, 27
FCSs and 5 CBOs in the districts of Kilinochchi, Mannar, Mullaitivu and
Vavuniya North.
The financial inputs to these RLFs over the period total SLR 40,487,368 and this
was loaned to 11,665 beneficiaries at interest rates that differentiated between
12% and 45%, each group being allowed to establish its own interest rate levels.
The methodology is based on group formation through a social mobilisation
process and training given in the management of funds and group management.
The training sessions were at the most over 3 days and included group formation
and management, savings, loans, and identification of income generating
activities.
There have been further training modules such as loan delinquency presented to
the groups over the period. Savings are recorded in individual savings passbooks
however each group has different rules concerning, the amount of savings
required to qualify for a loan, saving interest rates and withdrawal regulations.
Some of the groups do not allow savings to be withdrawn unless the member
leaves the group; this encourages members to leave the groups once a loan is
given and repayment made.
There are some well managed RLFs that have produced positive results in
assisting the group members to establish income generating activities and to form
cohesive groups within communities that are utilising the profits from interest
payments to undertake socially responsible activities such as training and paying
for pre school teachers. Two examples are:
1. The Pandiyankulan, Thunukkai Development Organisation (PTDO) has 2,000
active members in its savings and credit scheme. This NGO supports 21 pre
schools by supplying and paying for 35 teachers and 4 co-ordinators. PTDO
also own and manage a pharmacy and a retail shop that are profitable. There
are 16 board members of whom 6 are women and 12 paid staff including 3
loan collection officers. The election of board members, and the management
processes are transparent and participative. This NGO has been funded by
Save the Children Norway as well as CARE and maintains two separate sets
of records.
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