Credit Fund in Operation

The Janasaviya Trust Fund(JTF)in Sri Lanka works to alleviate poverty in a variety of ways ranging from the provision of grants to carry out community infrastructure projects (roads,dams)using local labour to the implementation of programmes designed to improve nutrition in pre school children.

The JTF works as an apex organisation which operates its credit scheme by providing funds to Partner Organisations(POs)which in turn are involved in the actual running of the credit and savings programmes.

The JTF sets out well defined specifications when selecting POs and the development and continuation of the programme lies in the POs.

POs include NGOs, village based grass roots organisations and commercial and non commercial banks.

An organisation to be selected as a PO, must fit into one of 3 specified criteria.

The organisation must have at least two years’ experience in lending to the poor and the loan recovery rate in the two years must be a minimum of 70%.An organisation with one years experience in lending to the poor must have a recovery rate of 90% or have a recovery rate of 70% together with a bank guarantee equivalent to the funds it disburses in JTF loans.

In addition to the initial specifications the organisation must demostrate financial viability or the potential for viability.

It must have a well developed and active savings mobilisation component which must be managed by a sound, well organised management and accounting system and credit monitoring facilities.

The organisation must have the capacity to implement the Credit Fund’s lending policy which involves the making of small,short term loans at commercial rates of interest, relies on character references instead of collateral and uses a group lending approach.

It must also demonstrate that it can successfully mobilise beneficiaries for training, decision making, utilisation of resources or other community and participatory processes or it must demonstrate an established working relationship with a community based organisation which has the capacity to undertake these tasks.

The PO must undertake human resource development training and provide such training to beneficiaries to a standard acceptable to JTF. Prior to the disbursement of loan funds, the PO must obtain a certificate from the Human Resource and Institutional Development Division(HRID)of the JTF confirming that its beneficiaries have obtained a satisfactory level of social mobilisation training.

Where the PO is a bank, it can implement social mobilisation through a community based organisation which will be trained by the JTF.

The Credit Fund provides POs with a comprehensive training which includes promoting the POs’ institution building capacity if and when required, in order to help the POs sustain their capacity to assist the poor on a long term basis.