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

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UNDP in the North & East - The Jaffna Resettlement and Rehabilitation Project The JRRP microfinance component was funded by AusAID during 1999-2000 at a value of AUS$ 100,000. In the two designated Resettlement Areas of the Jaffna Peninsula, Tellipalai and Kayts & Islands, JRRP initiated micro finance credit schemes in partnership with ten Multi Purpose Co-operative Societies (MPCS), with five in each area. The MPCSs had a joint membership of some 20,000 members in March 1999 at the outset of the schemes and this has grown to over 40,000 members to date. The MPCSs have substantial funds from members’ savings however due to stricture by the Assistant Commissioner Cooperatives Department and the MPCSs own risk analysis no funds were made available for a loan portfolio to assist members in the rehabilitation of their livelihoods. However since the scheme’s inception four of the MPCSs have started to allocate their own funds as a result of the schemes success and to cope with the demand. Training in business and fund management was given to the managers and staff of the Credit Rural Banks that act as the banking units of the MPCSs. Technical Partnerships were initiated with the Departments of Agriculture and Livestock, Agrarian Services, Industrial Development Board and the GTZ funded entrepreneurial training project CEFE. These partners extend services such as business plan preparation, enterprise training, field extension, technological inputs and mentoring to the beneficiaries of the micro finance credit schemes. Loans are based on demonstrated need and range from SLR 5,000 to SLR 50,000 thereby covering the segments of the economic stream from vulnerable poor through to micro enterprise development. Agreement with the GoSL on interest levels was at first difficult, as the government through the Government Agent had set a level of six percent as the ceiling rate. Once an adequate interest rate of twelve percent was agreed to be used for purposes of capital growth only, with the MPCSs paying for collection, administration and risk, the first scheme in Tellipalai was launched in March 1999. The interest rates have been gradually stepped up and as of July 2001 were seventeen percent. The MPCSs no longer pay for administration and collection from their own funds, but are still responsible for the non-performing loan portfolio. Both schemes have a regular and detailed monitoring system as an integral segment of the scheme. 85
Overview of the Schemes for financial year 2000 Table 11 UNDP Microfinance Scheme - Tellipallai Resettlement Area Tellipallai Resettlement Area Scheme inception March 1999. Loan Beneficiaries to Date 1186 Gender Breakdown Male – 1012 and Female – 174 Beneficiary Outreach Increase approx. 30 per/month Original Loan Fund SLR 7,250,000 Present Loan Portfolio SLR 8,942,770 Interest Paid (Fund Growth) SLR 1,692,770 Repayment Ratio 84% Loans Written Off Nil Sectoral Distribution of Fund: Agriculture (43%), Livestock (27%), Industry (10%) and Services (20%). Table 12 UNDP Microfinance Scheme - Kayts & Islands Area: Kayts & Islands Area Scheme Inception August 1999 Loan Beneficiaries to Date 607 Gender Breakdown Male – 406 Female - 201 Beneficiary Increase Approx. 20 p/month Original Loan Fund SLR 5, 00,000 Present Loan Portfolio SLR 5, 556,506 Interest Paid (Fund Growth) SLR 556, 506 Repayment Ratio Loans Written Off 75% (Includes Seasonal Repayments) Nil Sectoral Distribution of Fund: Agriculture – 40%, Livestock – 11%, Industry – 19%, Services - 30%. An evaluation of the JRRP found that the microfinance component was the most resilient of that programme continuing to develop successfully even during the heightening of the conflict and therefore the best approach for UNDP to take in areas still affected by conflict. 86
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National Microfinance Study of Sri
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(b) Lenders .......................
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Introduction into the pawning busin
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Microfinance Overview .............
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Savings ...........................
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List of Tables Table 1 Microfinance
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Table 70 Ratnapura District Microfi
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JBIC MFI MFN MIS MPCS MSME NCPPDP N
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Figure 1 Map of per Capita Value of
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Figure 3 Map of per Capita Value of
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Executive Summary This report provi
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Practitioner Microfinance Activity
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As a result the banks are moving aw
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The operating conditions of the con
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Donor Strategies There should be a
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Introduction to the Study The objec
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The survey does not claim to repres
Page 36 and 37: Introduction Socio-Economic Overvie
Page 38 and 39: These five years saw a spate of new
Page 40 and 41: The 'Economic Stream' Employment is
Page 42 and 43: Microfinance Clients and Beneficiar
Page 44 and 45: 1. Funders of Microfinance in Sri L
Page 46 and 47: CIDA believes that microfinance act
Page 48 and 49: The Department For International De
Page 50 and 51: NOVIB Partnerships tend to be long
Page 52 and 53: HIVOS The HIVOS Desk concentrates o
Page 54 and 55: Over time SIDA noted that the loan
Page 56 and 57: Comment freely given from one of th
Page 58 and 59: the time period of the project, wit
Page 60 and 61: Only a very small part of the US 50
Page 62 and 63: The demand for loans from this fund
Page 64 and 65: Without permanent access to institu
Page 66 and 67: This broad strategy means that the
Page 68 and 69: Beneficiary targeting was generally
Page 70 and 71: The FCSs were developed the followi
Page 72 and 73: CARE's new strategy commits the org
Page 74 and 75: Each CBO determines the level of in
Page 76 and 77: The project’s overall approach re
Page 78 and 79: Figure 6 GTZ/JRP - Project Interact
Page 80 and 81: The Social Development Foundation F
Page 82 and 83: There are no sector-based quotas ap
Page 84 and 85: Over the past five years SCN has as
Page 88 and 89: In December 2001 a new UNDP Program
Page 90 and 91: From previous experience and lesson
Page 92 and 93: World Vision Lanka WVL believes tha
Page 94 and 95: Membership Development 3500 3000 25
Page 96 and 97: Table 14 World Vision - Gramashakth
Page 98 and 99: ZOA works with community groups in
Page 100 and 101: At the village society and bank lev
Page 102 and 103: In Wayamba the sustainability of th
Page 104 and 105: Table 15 Badulla IRDP - Summary Dat
Page 106 and 107: DZPDP/WHRDA credit operations comme
Page 108 and 109: In the initial years they did not f
Page 110 and 111: Table 18 SPRDP- Loans 1993 to 1999
Page 112 and 113: (c)Lender-Practitioners The Central
Page 114 and 115: Society members have access to cred
Page 116 and 117: The RDBs were re-structured in 1998
Page 118 and 119: Table 25 Value of Loans Disbursed b
Page 120 and 121: The total savings and credit issued
Page 122 and 123: Table 29 Samurdhi - Loans by Distri
Page 124 and 125: In 1998 SEEDS converted to a separa
Page 126 and 127: Within the loans from SEEDS funds t
Page 128 and 129: The Arthacharya Foundation practice
Page 130 and 131: The program was assisted by some li
Page 132 and 133: However in general the majority of
Page 134 and 135: Table 33 Growth of MPCS CRBs -1990
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As at the end of December, 2000 a s
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Some 1,176 of the 1,476 Co-operativ
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A total of 74 NGOs were identified
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Finally only a small proportion of
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Table 38 TCCS Active Societies and
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District Unions - National Federati
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4. Facilitators a) National Level F
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International Centre for the Traini
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Funder-Practitioner Microfinance Ac
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As practitioner experience increase
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Introduction and Approach The major
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State-Owned Banks The Bank of Ceylo
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Starting in 1994, the NCRCS is aime
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The Seylan Bank The Seylan Bank ent
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Figure 9 Linking of the RBIP Tools
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People's Fast reduces loan processi
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In addition, RBIP monitors the impl
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The Hatton National Bank Case Study
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Seylan Bank Case Study The Seylan B
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Until 1961 private pawnbrokers were
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Bank officials stated that PSC staf
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The urban PSCs have on average more
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The lack of flexibility has induced
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From the borrowers perspective not
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The Peoples Bank, on the other hand
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Introduction and Approach Internati
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Displaced populations are dependent
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Large tracts of land have become to
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Public markets, shops, guest houses
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The previous thriving local economy
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The Wanni Access to the area known
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Remembering that these intervention
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This type of situation is seen thro
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People IDPs in welfare centres, sho
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World Vision has been working in al
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small entrepreneurs have received t
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The exception to this is a governme
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There has been some continued acces
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Introduction and Approach A distric
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The MPCSs were equally disrupted an
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The main body of the survey is pres
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Local NGOs 11 NGOs were identified
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Local NGOs 1 NGO was identified in
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Local NGOs 1 NGO was identified in
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Local NGOs 2 NGOs were identified i
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Local NGOs No NGOs were identified
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Gampaha District Microfinance Overv
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Hambantota District Microfinance Ov
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Jaffna District Microfinance Overvi
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Staring in 1998 each DS received SL
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Matale District Microfinance Overvi
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Matara District Microfinance Overvi
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Moneragala District Microfinance Ov
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Nuwara Eliya District Microfinance
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Polonnaruwa District Microfinance O
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Puttalam District Microfinance Over
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Ratnapura District Microfinance Ove
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Trincomalee District Microfinance O
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Vavuniya district Microfinance Over
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The Wanni Area Microfinance Overvie
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Summary Microfinance Activity by Ac
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The NGO questionnaire survey identi
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World Vision Lanka works in 5 distr
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Given that these figures do not inc
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Overall, 13 of districts had levels
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Averages Value of Loans Table 78 Av
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Volume and Number of Loans The surv
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Findings The key and main findings
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Service Providers The service provi
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those incapacitated by conflict, wi
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Cultures of Dependency in Microfina
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Strategic Recommendations The key s
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Conclusion The study found that the
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Charitoneko, S. and D de Silva (200
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Remenyi, J (1991). Where Credit is
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Technical Appendix
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