Padakhep provides collateral-free loan to the poor in both rural and urban areas in a simple, efficient and affordable manner. The borrowers use these loans in various IGAs to improve their socio-economic status. Credit operations are carried out through a Revolving Loan Fund (RLF). Members wait for only 7 days after their association/registration to get the first loan. Commonly, weekly or monthly installment system is followed for repayment and the first installment is given in the 2nd week of the loan i.e.a borrower gets two weeks grace period. The service charge is calculated at flat rate on the principal of the loan. The general loan can be taken for employment and IGAs while sectoral program loan can be taken for micro-enterprise development such as poultry, livestock, agriculture and small business/trade. The loan size of Padakhep usually varies from Tk. 5000 to Tk.10,00000 depending on the requirement of investment opportunity. A large number of borrowers are increasingly becoming self-reliant gradually through operation of the IGAs/Enterprise.
The microfinance program of Padakhep has the following major products (interventions) each has some specialty of the nature in consideration of the target beneficiaries.
Former Rural & Urban Microcredit
Jagoron is the name of a credit instrument of Padakhep to initiate household based enterprise development in Bangladesh. Under this program, borrowers are encouraged to undertake family-based income generating activities. With the support of PKSF, Padakhep extended its microfinance services to the rural and urban poor through Jagoron program, merging former rural microcredit (RMC) and urban microcredit (UMC). The purpose of Jagoron is to provide loan for creating opportunity to invest in diversified economic sectors for increasing income of the rural and urban poor. It is worth mentioning that the target people are imparted required training on skill development to undertake IGAs effectively.
Former Mirco-enterprise Loan
Agrosor was launched to extend financial services to enable some of the progressive members to undertake economic activities requiring larger amounts of capital. Under Agrosor loan, the borrowers can expand their existing enterprises or diversify them and upgrade themselves into micro entrepreneurs by using the loan fund. The Micro Enterprise program of Padakhep, re-named as Agrosor, is operating in the entire working area because of its huge demand and potentiality.
The potential borrowers and IGA operators of RMC/UMC are mainly the target members of MEs.These are individual loans, assessed on the basis of household cash flow, business volume and the borrower’s reputation amongst her/his business peersin the community. A minimum of 2 years business experience, a visible venture, and the businesses’ potential to generate wage labor employment(other than family labor), are the primary requirements for being considered for a ME loan.The size of the loan depends on the businesses volume and its potentials and the comparative advantages that the entrepreneurs have. Micro enterprise loans ranged from BDT 30,000 to 10,00000. A guarantor’s signature is required for all ME loan agreements, and the members are required to save BDT200 per month in addition to the mandatory initial savings of 2.5% of the loan amount.
After successful use of an Agrosor loan, ceiling is increased gradually. Padakhep also provides need based skill development training to such entrepreneurs. The program not only helps alleviate poverty of the borrower families, but also creates substantial wage employment and thus solving unemployment problems of the country to a some extent
Former Disaster Management Loan
Padakhep has created Disaster Management Loan (DML) newly titled as `Sahos’ for ensuring immediate financial assistance to support the vulnerable poor during and post disasters. This fund mainly seeks to facilitate the coping and recovery mechanism of poor people. Sahos is primarily used for the livelihood restoration including repairing of houses, tube wells and latrines; restoring the existing IGAs and ensuring consumption capabilities during post-disaster period. It also guarantees the provision of emergency medical services, water and sanitation. Only the hard-core members of Padakhep are eligible for this interest-free long-term loan with flexible repayment schedule.
Former Ultra Poor Program
Buniad (earlier known as Ultra Poor Program) is exclusively designed to address the needs of the excluded ultra-poor of the society who had always been chronically left out from the traditional microfinance services. Such exclusion prevailed due to socio-economic conditions and the state of minimum capacity of the poor. Moreover, the rigidity of conventional microfinance systems prevents participation of the ultra-poor in the system in practice. Padakhep started implementing Buniad with the effective collaboration of PKSF as its mainstream program. The main objective of Buniad is to support the extreme poor in such a way so that they become capable to create a strong foundation of sustainable income opportunities and human dignity as well as they can lift out of extreme poverty. Buniad offers distinctive flexibilities to the extreme poor in terms of deposits and withdrawal of savings, loan repayment, attendance in group meetings and minimum savings requirement for a fresh loan. Woman-headed family, beggar, day labors, divorced women, widows; child labor headed family parents, floating people, street dwellers, slum dwellers, homeless people, and landless farmers, elderly and disabled people with no/scanty source of income are enrolled under this program.
Padakhep also provides different non-financial supports like primary healthcare services, technical services for implementing IGAs, capacity building training, and support to the disaster-stricken people, awareness building on nutrition and social issues to the targeted participants according to their needs. With the effective financial and non-financial support from Padakhep, the selected beneficiaries of Buniad program are now involved in different kinds of IGAs, securing their income and improved their livelihoods in the society.
Former Seasonal Loan & Agriculture Sector Microcredit
Sufolon is a special agricultural lending program designed by PKSF for rural and peri-urban areas. In 2014, Agriculture Sector Microcredit and Seasonal Loan programs got merged and renamed as Sufolon. Sufolon is given to the marginal and small farmers to procure farm inputs (seeds, fertilizer, irrigation water, pesticides etc.) during cultivation period with technical support also. The other salient features of this service include: provision of flexible repayment mode, such as one shot or a single installment, seasonal or balloon repayment, consistent with the seasonal agricultural/farming activities and the flexibility of having multiple loans to diversify their production. Providing skill development training and transferring modern technologies to enhance their skills and productivity in the long run are two important features of this loan service.
The loan is given for a short period (< 1year) depending on the cropping season. Every borrower is eligible to receiving 2 loans: one for regular family consumption and other for seasonal production activities. Padakhep provides loan at the start of particular season and collects the outstanding after harvest, enabling the borrowers to avail the opportunity of utilizing inputs properly and increase their production under Sufolon. Since inception, this unique financial assistance has received huge response for the investment of different farm activities/enterprises such as crop cultivation and processing, livestock, fisheries, agro-forestry, agro-processing etc. The provision of the loan repayment in a single installment after the sale of the product has made it very attractive among the borrowers.