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Credit Fund in Operation

The Janasaviya Trust Fund -JTF- in Sri Lanka - 5


08 / 1994

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 using local labour to the implementation of programmes designed to improve nutrition in pre school children.

The savings and creditaspect of the JTF is carried out by the JTF Credit Fund which works as an apex organisation which provides funds to Partner Organisations(POs)which in turn provide credit to poor beneficiaries involved in the PO’s credit scheme.

Promoting savings mobilisation is a primary objective of the credit Fund as it provides the PO with a source of funds thus forming a basis for capital formation. It also provides practical financial management skills to the loanee who manage the savings component.

The loanees are required compulsorily to contribute to individual savings accounts and to the common savings account of the group called the Group Contingency Fund(GCF).

The PO must deposit the savings contributed by the loanees in an interest earning account in an approved financial institution on behalf of the beneficiaries. In proof of this all loanees must be provided with a pass book endorsing the amounts deposited. The PO can set out guidelines for withdrawals but withdrawals by a beneficiary leaving the programme can be made only if such beneficiary has no outstanding loans with the PO. Other withdrawals must be done after 6 months in the credit programme and such withdrawals may not exceed 50% of the balance in the individual’s account.

The Group Contingency Fund is the mandatory savings account of the PO and is owned and managed by the loanees. 5% from each loan taken is deducted and credited to the CGF at the time of disbursement. The GCF is owned by the entire group of loanees and individual members have no claim to the GCF. Therefore members who leave the group are not entitled to withdraw their contributions unless it is an instance where the group has decided to include their individual savings with the CGF. Elected officers manage the CGF and are rotated over a reasonable time.

Loans can be obtained from the GCF for any purpose. The loan can amount up to 50% of the amount in the GCF. Loans must be approved by the entire membership which decides the interest rates as wel.

The GCF is used to cover losses due to defaults, to give supplementary loans in cases of project failure and to establish a life insurance scheme.

As the GCF is run wholly by the beneficiaries, the role of the PO in the GCF is limited.The PO assists the officers to deposit GCF funds in interest earning savings accounts in banks and helps them process loans, document loans and savings and provides training in book-keeping.

The capital raised by the issue of shares is invested in a savings account with a commercial bank and the sum can be withdrawn only with the express consent of the JTF.



, Sri Lanka


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IRED Asie (Development Support Service) - 562/3 Nawala Road - Rajagiriya - Sri Lanka Tel : 94 1 695 481 - Fax : 94 1 - 688 368

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