Livelihood Restoration Loan (LRL) is a specialized program initiated to tackle the negative impacts of the Covid-19 pandemic and to revive the economic activities of the rural poor and create self-employment opportunities for them. In case of disbursement of loans under the LRL, relatively high poverty-prone districts such as Kurigram, Bandarban, Satkhira, Khulna and Sunamganj are given the highest priority, alongside the affected low-income people across the country.
In FY 2020-2021, the Government of Bangladesh (GoB) allocated BDT 500 crore in favour of PKSF under a stimulus package to tackle the negative impacts of the Covid-19 pandemic and to revive the economic activities of the rural poor and create self-employment opportunities for them. On top of this amount, PKSF made available BDT 100 crore from its own fund and launched this specialized loan program in September 2020.
PKSF is disbursing loans through selected Partner Organizations (POs) to create self-employment opportunities and restore the pandemic-stricken economic activities under five categories – agriculture and agro-related rural entrepreneurs, micro and cottage industry-related entrepreneurs, trained youths, unemployed youths and returning migrant workers.
In FY 2021-2022, the GoB under a separate stimulus package allocated BDT 500 crore in special grant in favour of PKSF. PKSF now is implementing the Phase 2 othe LRL program with BDT 500 crore under a flexible guideline prepared in line with the conditions set by the Financial Institutions Division.
Some main features of the LRL Phase 2 include low service charges at the PKSF-to-PO level (reduced from 5% to 0.5%) at the PO-to-borrower level (slashed from 18% to 4%), and a more flexible loan tenure (from one year to two years). This loan is disbursed among the pandemic-hit rural of 3 categories – the poor, the extremely poor and the day labourers. As of June 2022, 4,26,195 members received loan support worth BDT 1,460.08 crore under the two LRL phases.
A recent study by PKSF on the effectiveness of the LRL program found the loan support achieved its intended purpose, i.e., it has successfully restored the livelihoods and economic activities of the participants. Almost 91% of the disbursed loan was used in income-generating activities.
The Financial Institutions Division, Ministry of Finance, and other relevant stakeholders, have appreciated the impacts of the LRL scheme to tackle the Covid-19 fallout.
Sector-wise loan disbursement under the programs is presented in the table below:
Sector | Direct use of the loan in IGA establishment |
Agriculture and agro-related small entrepreneurs | 91.5% |
Micro and cottage industry-related entrepreneurs | 87.2% |
Trained youths | 91.6% |
Unemployed youths | 90.9% |
Returnee migrant workers | 94.7% |
Total | 91% |
The Financial Institutions Division, Ministry of Finance, and other relevant stakeholders, have appreciated the LRL scheme to tackle the Covid-19 fallout. PKSF and its partner organizations are implementing these special loan programs with the stimulus package using their existing infrastructures. PKSF is being able to disburse the loan among the affected people in a quick manner as it has a vast network of partner organizations across the country.