PART IV

IMPLEMENTATION MANUAL FOR THE SUSTAINABLE DEVELOPMENT FACILITY (SDF)
  

This manual explains how institutions known as Sustainable Development Facilities (SDFs) implement and manage activities under the Sustainable Community Development Programme (SCDP). In particular, it explains the proper use of the Sustainable Development Facility Fund (SDFF), the primary financial mechanism for the SCDP Programme. This implementation manual has four components: (i) an introduction to the SCDP and the SDF (ii) the institutional and operational framework of the SDF, (iii) operation and management of the SDF at the District level, and (iv) operation and management of the SDF at the community level.

1. INTRODUCTION TO THE SCDP AND THE SDF

The Sustainable Community Development Program (SCDP) is a joint undertaking of the National Planning Commission (NPC) and the United Nations Development Programme (UNDP). The main thrust of the Programme is to improve the natural environment and alleviate poverty through active participation of the people at the grassroots level. It uses social mobilisation to encourage local people to form their own organisations, to promote their own development using available resources, and to actively participate in the decision-making process for improving their lives and their natural surroundings. SCDP tries to establish an explicit link between self-governance and sustainable local development.

SCDP consist of two components: (i) institutional development and capacity building, and (ii) sustainable economic development. Through institutional development, SCDP encourages villagers to organise themselves into community-based organisations (CBOs), and to begin to save regularly and invest their savings for income generating activities. Furthermore, SCDP supports capacity building activities so that CBOs and non-governmental organisations (NGOs) develop the skills they require to function and manage themselves efficiently. The sustainable economic development component consists of a credit capital fund, which is used to provide micro-credit to CBO members to increase economic development, and a Seed Grant Fund which is used to assist the community to develop rural infrastructure and improve environmental conditions.

In each district, the SCDP has established a support organisation called the Sustainable Development Facility (SDF). This organisation can be either an NGO, or a separate organisation that operates under the District Development Committee (DDC). The SDF is responsible for providing assistance to CBOs, and managing the Sustainable Development Facility Fund (SDFF).

The SDFF is subdivided into four separate funds, the Credit Capital Fund (CCF), the Seed Grant Fund (SGF), the Human Resources Development Fund (HRDF), and the Operational Cost Account. CBOs from the participating Village Development Committees (VDCs) can borrow money from the CCF to fund economic development, social development or environmental management activities. A proportion of the interest earned from these CBO loans, as well as approximately 15% of the total money received for the SDF Fund, is used to pay the operational costs of the Sustainable Development Facility.

To ensure that the SDF Fund is managed efficiently and effectively, it is necessary to have clear guidelines regarding management of the Fund. This manual has been prepared for that purpose.

2. INSTITUTIONAL AND OPERATIONAL FRAMEWORK OF THE SDF

2.1 General

Building the capacities of local institutions helps ensure the sustainability of SCDP in the long run. SCDP is involved in capacity building on two levels. The SDF staff encourages villagers to organise themselves into community-based organisation (CBOs) and initiate a variety of community development and income generating activities (which complement and promote a stable natural environment). Within the SCDP Programme, CBOs are the grassroots level organisations that organise and implement the Programme activities. The SDF provides these CBOs with the support they require to execute their activities. Eventually, SCDP will help the CBOs develop into self-governing institutions at the grassroots level.

A self-governing institution is an organisation that is completely managed by local people. Characteristics of self-governing institutions include:

The operational framework for implementing the Sustainable Community Development Programme through the Sustainable Development Facility (SDF) should include the following components or conditions to ensure self-reliance, self-empowerment and self-governance of the Programme:

2.2 Organisational Structure of the SDF

The SDF can be either a non-governmental organisation (NGO), or can be managed as a separate entity under the DDC. The SDF will be directly accountable to the Sustainable Development Committee (SDC) through the Sustainable Development Co-ordinator. The SDF/SO staff will consist of: a Natural Resource Management Officer, Community Development Officer, Interpise Development Officer, Community Activists, a Savings and Credit Facilitator, a Technician (Civil Engineering), and Administrative staff. The staff will be responsible for carrying out the daily functions of the SDF. The SDF staff are responsible for promoting, facilitating and monitoring the sustainable community development program. Further details on the responsibilities of the SDF are provided in Section 2.3.4.

2.3 Operational Mechanism for SDF Credit Capital Fund Transactions

Managing credit transactions requires procedural clarity. The existing legal framework plays a crucial role for the Programmes' success. Institutions disbursing loans should have the legal authority to collect savings and disburse loans at interest rates equivalent to person to person transactions at a local bank. In this context, institutions that make loan transactions directly with CBO members should have the legal authority to do so.

Within the framework of these legal pre-requisites, the CBO manager should collect loan requests from CBO members and forward these requests (on loan demand forms) to the SDF for approval. Once the loan requests are approved, the SDF distributes the net amount to the CBO manager and the CBO manager disburses the appropriate amount to individual members informally.

2.4 Stakeholder Responsibilities

The main groups involved in implementing this scheme are the beneficiaries, the CBO office bearers, the VDCs, and the SDF. In order to ensure success in implementing this scheme, the duties and responsibilities of the various actors involved in the SCDP have been identified as follows:

2.4.1 Beneficiaries (Individual CBO Members)

Beneficiaries will be responsible for:

2.4.2 CBO Office Bearers (Chairperson and Manager)

CBO office bearers will be responsible for:

2.4.3 Village Development Committee (VDC)

Under this scheme, the village development committee (VDC) will have an intermediary role. The VDC will be responsible for providing office space for the SCDP. The VDC will also facilitate and support the efforts of the CBOs under its jurisdiction. The VDC is encouraged (but not obligated) to contribute a part of its annual budget to the Credit Capital Fund or the Seed Grant Fund. Further, the VDC should periodically monitor and supervise the activities undertaken by the CBO members.

2.4.4 Sustainable Development Facility/ Support Organisation

Under this program the SDF will be managed at the district level. Acting under the supervision of the Sustainable Development Committee (SDC), the SDF will be responsible for the following:

General responsibilities of the SDF/SO:

Specific duties of the SDF/SO:

3. OPERATION AND MANAGEMENT OF THE SDF FUND

3.1 Creation of Sustainable Development Facility Fund

A Sustainable Development Facility Fund (SDFF) should be established in each district for financing Programme activities. The SDF Fund will have four accounts in the bank in the district headquarters. The four accounts are the Credit Capital Fund Account, the Seed Grant Fund Account, the Human Resources Development Fund Account and the Operational Cost Account.

3.2 Disbursement of Loans from Credit Capital Fund Account

The Credit Capital Fund (CCF) will be used for loan disbursement to CBOs. To obtain a loan from the SDF CCF, individual CBO members must fill out loan application forms. All members of a CBO must approve each individual's application. All CBO-approved loan applications are then submitted to the SDF by the CBO manager. The SDF releases funds to the CBO managers only, and the CBO managers are responsible for allocating funds to the appropriate CBO members as per their loan request forms.

3.3. Loan Approval

The Sustainable Development Committee shall approve loan applications received from the CBOs strictly on the basis of the criteria provided in Section 2.2 of the SDF Directive 2056 B.S.. Once a loan application is approved, the money is disbursed from the CCF to the manager of the concerned CBO.

3.4. Loan Demand Processing

In order to apply for a loan, CBO member(s) must complete a loan application form which describes their loan requirements. The loan requirements of members should be discussed thoroughly in a CBO meeting. It is suggested that the CBO members complete the loan application form as a group. The completed loan application form should be submitted to the CBO manager who will review the application and then present it at a CBO meeting for approval by the CBO members. CBO members must review the savings status of the group member, the loan history of the member, the repayment situation of the member’s previous loan, etc. If there is more than one applicant at a time from a CBO, then the CBO members shall prioritise and rank the applications. A sample of a loan application form is provided in Example 1 of the Annex.

3.5. Disbursement of Approved Loans

The SDF should disburse approved loans to the CBO managers in a transparent way during a CBO meeting. Prior to loan disbursement loan deeds should be prepared by the SDF. A sample of a loan deed is provided in Example 2 of the Annex.

3.5.1 Purpose of loan

Loans from the SDF are to be used by CBO members to initiate enterprises that provide greater employment opportunities, high yields, and a quick return on their investment. Activities should promote sustainable use of available resources and support the environment.

SDF loans will be provided for enterprises including, but not limited to, the following:

In addition, loans shall be provided for activities such as cereal and cash crop production, livestock enterprises and other activities that provide high yield and quick return.

3.5.2 Loan limit

The loan limit under this scheme should be fixed based on the financial needs of the CBO members. The maximum amount that can be disbursed to any particular CBO should be initially thrice the savings amount of the concerned CBO.

3.5.3 Interest rate

The interest rate for the loan disbursed by the SDF should be based on the prevailing bank rate. However, the Sustainable Development Committee reserves the right to change the interest rate. Out of the interest earned from the CBO loans, 2 % shall go to the CBO manager and out of the remaining interest, 25 % shall be kept by the CBO and the remaining 75 % of the interest (plus the principal amount) shall be returned to the SDF.

3.5.4 Duration of the loan

The loan shall be repaid within one year of disbursement. It can be repaid either in one installment or in multiple installments depending on the number of borrowers, the nature of the activity and how far away from district headquarters the CBO is located.

3.6 Procedure for Disbursing Loan

Prior to loan disbursement, the SDF should prepare the necessary loan deeds. The suggested format for a loan deed is provided Example 2 of the Annex. The SDF should disburse approved loans within two weeks from the date of receipt of the CBO loan application form. Approved loans should be disbursed either in cash, by cheque or in kind, according to the nature of the CBO projects.

3.6.1 Collateral

Joint liability of all the CBO members shall be used as collateral for loans disbursed to the CBO by the SDF.

3.6.2 Loan inspection and follow-up

Upon disbursement of the loan, the use status of the disbursed loan should be inspected and supervised by the SDF staff to ensure that disbursed loans are used for the planned purposes. Each staff member of the SDF should be entrusted with the responsibility of loan inspection and supervision for a group of CBOs. Periodic inspections of loan utilisation status should be done in collaboration with the CBO manager.

3.7 Loan recovery

Loans should be recovered according to a repayment schedule that is mutually set by the SDF and the CBO. The CBO managers are responsible for collecting loan payments from their individual CBO members, and then forwarding the payments to the SDF. SDF loans should be repaid by the CBO managers according to the same schedule that the CBO managers receive loan payments from their CBO members. The following loan recovery procedure has been suggested:

3.7.1 Information on loan repayment time

The SDF must periodically inform and remind the borrowing CBO of the loan repayment schedule and the amount of the installments.

3.7.2 Loan collection process

A functional group consisting of the CBO chairperson, a SO/SDF representative and a VDC representative may be constituted to ensure timely recovery of the loan.

Prior to loan collection from any CBO manager, the loan collection authority (staff of the SDF) must be aware of:

Money should be collected according to the loan collection schedule. If the borrowing CBO does not repay the loan according to the repayment schedule, the SDF should charge 5 % penal interest to the culpable members. The SDF should not permit extensions on loan payments under any circumstances.

3.7.3 Actions to defaulters

If a CBO does not repay its loan installments according to loan repayment schedule (either due to unwillingness to repay or inability to repay) the following measures should be adopted to collect the outstanding loan amount:

3.7.4 Responsibility of loan collection

Collection of the loan will be the joint responsibility of the CBO, the SDF and the concerned VDC.

3.7.5 Provision for loan collection

In the event that the measures recommended in Section 3.7.3 are not successful the SDF may seize the CBO savings to retrieve the outstanding funds.

3.8 Account and Record-keeping System

The SDF should maintain a record of all loan transactions using the double entry system of accounting. Accounts should be maintained under different account headings. The SDF should maintain records of all transactions from the date of initiation of the transaction.

3.8.1 Vouchers

Vouchers are the starting documents for all accounting transactions. Vouchers should be prepared for funds received as well as for funds disbursed. All bills, receipts, and other related documents should be attached to the voucher to authenticate the transaction.

Under the double entry system of accounting, the voucher will show that two accounts are affected by the transaction, i.e. debit for expenses and credit for receipts. The voucher shows which account is to be debited and which is to be credited. A short narration (description) is written on the voucher to explain the transaction. An example of a voucher is provided in Example 3 of the Annex.

After preparing a voucher, the transaction should be recorded in the appropriate ledger. This process is commonly referred to as voucher posting. To maintain detailed accounts, vouchers should be posted in both a main ledger and a subsidiary ledger. The main ledger will show the amount disbursed/received, while details of the transaction (such as name and address) shall be posted in the subsidiary ledger.

3.8.2 Ledgers

The following five types of main ledgers should be maintained:

1. Liability and Income ledger,
2. Asset and expenditure ledger,
3. Loan ledger,
4. SDF ledger, and
5. CBO loan transaction ledger

Each of these ledgers, and the accounts they keep records of, is discussed below.

1. Liability and Income Ledger

In this ledger, detailed liability and income accounts should be maintained. This ledger shows the total liability of the SDF. Transactions pertaining to the subsidy account, the loan account, the payable account and the income account should be recorded in this ledger. An example of a liability and income ledger is given in Example 4 of the Annex.

  • Subsidy account: Any subsidy received by the SDF from outside donors (Government, Non-government or other donor agencies) are the SDF's income, and accounts of such transactions should be kept in the liability and income ledger.
  • Loan account: Any loans acquired by the SDF from financial institutions to disburse loan to CBO members under its jurisdiction are the SDF's liability and accounts of such transactions should be kept in the liability and income ledger.
  • Payable account: Any amount to be paid to someone or expenses incurred but not paid, should be recorded in the payable account as the liability of the SDF.
  • Income account: The SDF earns income from various sources (such as the interest earned from CBO loans) and accounts of such income must be maintained, and recorded in the liability and income ledger.

2. Asset and Expenditure Ledger

Accounts of expenses incurred by the SDF and of assets accumulated should be clearly recorded. An example of an asset and expenditure ledger is given in Example 5 of the Annex. The asset and expenditure ledger should record transactions pertaining to the cash account, the bank account, the loan disbursement account, the receivable account, the asset account, the purchase account, and the expenditure account.

  • Cash account: All transactions made by the SDF in cash should be recorded in the cash account.
  • Bank account: All transactions made by the SDF by cheque or otherwise using a banking service should be maintained in the bank account.
  • Loan disbursement account: Records of all loans disbursed by the SDF to the CBOs should be maintained separately in the loan disbursement account.
  • Receivable account: All funds received by the SDF from individuals, institutions, employees, etc. should be recorded in the receivable account.
  • Assets account: Statements of the different types of assets/properties acquired by the SDF should be maintained in the assets account. A system of depreciation deduction should also be introduced.
  • Purchases account: Accounts of expenditures made for different types of materials and equipment purchased by the SDF (for operation) should be maintained in the purchases account.
  • Expenditure account: Accounts of the SDF's different expenditures such as remuneration, daily subsistence allowance, house rent, stationary, printing, etc. should be maintained in the expenditure account.

3. Loan Ledger

Accounts of loan transactions (disbursement, collection, outstanding, overdue, etc.) made by different CBOs must be maintained on an individual basis in loan ledgers. The ledgers must show details about the status of the loan. The format of this ledger is given in Example 6 of the Annex.

4. The SDF Ledger

An account showing the various transactions of the SDF should be maintained so that it is possible to have a clear indication on overall status of the SDF Fund. The format of this ledger is given in Example 7 of the Annex.

5. CBO Loan Transaction Ledger

A separate ledger showing loan transactions between the SDF and the CBOs should be maintained. The format of this ledger is provided in Example 8 of the Annex.

3.8.3 Account of loan transactions by purpose

A separate subsidiary account should record CBO loan transactions by purpose. The suggested format for maintaining this account is provided in Example 9 of the Annex.

3.8.4 Trial balance

A trial balance should be prepared to check the accuracy of the income and expenditure accounts maintained by the SDF. The trial balance should show that the debit and credit accounts are equal and in balance. The format to be used for the trial balance is provided in Example 10 of the Annex.

3.8.5 Profit and loss account

A profit and loss account should be prepared at least once a year showing expenditures (salary, house rent, stationary, travelling and daily allowance, interest expenses, etc.) on the debit side and incomes (interest earning, other income, etc.) on the credit side. The format of the profit and loss account is provided in Example 11 of the Annex.

3.8.6 Balance sheet

In order to analyse its financial situation, the SDF must prepare a balance sheet that shows the transactions in the trial balance and the profit and loss account. A balance sheet, which reflects the assets and liability situation of the SDF, is a document showing the financial transactions and status of the SDF. The format of the balance sheet is shown in Example 12 of the Annex.

3.8.7 Auditing

Auditing refers to the process of checking the accuracy of the accounts maintained by the SDF. There can be two types of auditing:

External auditing should be done at least once a year.

3.9 Capability Enhancement of the CBOs

The SDF should involve CBO managers and executive members in all its activities. In addition, the SDF should organise training workshops on topics such as book keeping and accounting, and savings and credit operation/management, in order to enable CBO members to undertake all of the activities involved in operation and management of the Programme.

3.10 Monitoring and Supervision

The SDF should monitor all loan transactions undertaken by the CBOs. It should be primarily concerned with monitoring and supervising the loan use status of its beneficiaries.

4. OPERATION AND MANAGEMENT AT THE CBO LEVEL

4.1 CBO Formation and Registration

The SDF community activists and social mobilisers go to each settlement in the Programme VDCs to explain the Programme, and to motivate and assist the community members to form CBOs. The size of the CBO will vary depending on the size of settlement, however, to participate in the Programme, at least 80% of the households in the settlement must join the CBO. The CBO members should select one member to be the CBO manager, and one member to be the CBO chairperson.

All the CBO members must sign a memorandum of understanding (MOU) to accept joint liability for the loan transactions of other CBO members. A sample of a MOU is provided in Example 13 of the Annex. The CBO should then submit an application for official recognition as a SCDP CBO to the SDF. Upon receipt of the application the SDF should register the CBO providing all of the information is complete.

4.2 Eligibility for CBO Membership

Members of the CBO must be:

Note: to qualify as a SCDP CBO, people from at least 80% of the households in the settlement must have membership in the CBO.

4.3 Eligibility Criteria for Obtaining Loans

In order to obtain a loan from the SDF, applicants must be:

Note: although several members of one household may be members of the same CBO, only one CBO member per household can obtain a loan from the SDF at any given time.

4.4 Savings Collection

CBO members must collect savings each week during their weekly meetings.These savings are put in the CBO’s Community Fund (CF). Records/accounts of savings collected should be accurate, clear and transparent to make the CBO members more confident of their ability to save. The manager of the CBO should maintain the records and review them at periodic intervals. The suggested format for a group savings record is provided in Example 14 of the Annex.

4.5 Savings Mobilisation

The CBO community fund savings should be mobilised by providing loans to the most needy CBO members. The suggested format for recording information about CBO savings mobilisation is provided in Example 15 of the Annex.

4.6 Community Fund Loan Demand Collection

The CBO manager must collect Community Fund loan demand from the CBO members during the CBO meetings. Records of loan demand collection should be kept using the format provided in Example 16 of the Annex.

4.7 Review and Forward of SDF Loan Application

The CBO members should review SDF loan applications to check features such as the eligibility criteria of the applicant, the amount of loan requested, the purpose for the loan, the amount saved, the repayment schedule, and the repayment status of already disbursed loans, etc. After a thorough review of the loan applications, the CBO manager should forward them to the SDF for approval.

4.8 Review Committee

A loan review committee consisting of the CBO chairperson, the CBO manager and a social mobiliser from the SDF should be formed. This committee should be responsible for reviewing SDF loan applications.

4.9 Obtain Loan from the SDF

The CBO should obtain the approved loan from the SDF as per the loan disbursement plan. The CBO manager should disburse the amount thus obtained to the respective CBO members.

4.10 Disbursement of Approved Loan

The CBO manager should disburse approved loans to the applying CBO members. Prior to loan disbursement, loan deeds should be completed by each CBO member who will be receiving a loan. A sample of a loan deed is provided in Example 17 of the Annex.

4.10.1 Duration of loan

The duration of the loan should not exceed one year. The duration of the loan should be jointly decided by the CBO members and the SDF, and will be fixed once decided. The duration of the loan depends on the nature of the activity to be funded, and how quickly the activity will produce measurable returns.

4.10.2 Purpose of loan

Credit assistance provided under this program should be used to initiate income generating activities. Enterprises should create greater employment opportunities, and provide high yields and quick returns.

SDF loans will be provided for enterprises including, but not limited to the following:

In addition, loans shall be provided for activities such as cereal and cash crop production, livestock enterprises and other activities that provide high yields and quick returns.

4.11 Loan Limit

The loan limit for CBO members under this scheme should be fixed based on the financial needs of their proposed enterprise. As this is a collateral free loan scheme, initially, the loan disbursed to an individual member should not exceed three times the amount of savings collected by the member. However, once the credit scheme is operating successfully, the SDF may decide to increase the loan limit.

4.12 Interest Rate

The interest rate for loan should be equivalent to the current bank rate at the time of loan disbursement. The interest earned on CBO loans is to be divided as follows:

Example: if the bank interest rate was 18%, the CBO interest would be divided as follows 2% interest goes directly to the CBO manager, 75% of the remaining 16% interest (= 12%) goes to the SDF; and 25% of the 16% (= 4%) goes to the CBO.

If the borrowers do not repay their loans according to the loan repayment schedule, 5 % penal interest should be charged on the overdue amount.

4.13 Loan Demand Processing

In order to apply for a loan, CBO member(s) must complete a loan application form which describes their loan requirements. The loan requirements of members should be discussed thoroughly in a CBO meeting. CBO members must review the savings status, the repayment situation of previous loans etc. of those members who want to apply for SDF loans. Loan applications should be unanimously approved by all the CBO members. It is suggested that the CBO members complete the SDF loan application form as a group. A sample of a loan application form is provided in Example 1 of the Annex. Completed loan applications should be submitted to the concerned CBO manager The CBO manager should review the loan applications thoroughly before submitting them to the SDF.

4.14 Procedure for Disbursing Loan

Once the SDF approves the CBO loan, and disburses the total amount to the CBO manager, the CBO manager should distribute the appropriate amount to the individual CBO members who applied for SDF loans. The CBO manager should release the funds to the individual members within two weeks of loan approval. Prior to loan disbursement, the CBO manager should prepare a loan deed. A sample of a loan deed is provided as Example 17 of the Annex.

4.14.1 Collateral

The CBO members accept joint liability for all SDF loans, and the savings collected in the CBO community fund will be used as collateral for the loans disbursed by the SDF.

4.14.2 Loan inspection and follow-up

Upon disbursement of the loan, the use status of the loan should be inspected and supervised by the CBO executive committee members to ensure that the loan has been used for the specified purposes. Efforts should be made to discourage misuse of loans. From time to time, the SDF staff should also inspect the loan utilisation status in collaboration with the CBO chairperson.

4.14.3 Savings and credit pass-books

The CBO should provide savings and credit pass-books to each of the borrowing CBO members. Savings and credit pass-books are used to record information about the approved loan amount, the loan repayment schedule, the amount of savings collected, the amount of the loan instalments, and the amount of loan remaining to be repaid. Using pass-books helps to ensure transparency on savings and credit transactions of borrowing CBO members. The suggested format for a savings and credit pass-book is provided in Example 18 of the Annex.

4.15 Loan Collection Procedure

Disbursed loans must be collected according to the loan repayment schedule as outlined in the loan deed. The procedure is as follows:

4.15.1 Information on loan repayment time

The CBO manager must remind the members who have taken loans of the loan repayment schedule and the amount of instalments. The loan pass-books (which were distributed to borrowers) must contain the repayment information, and borrowers must be taught to repay loans according to the set loan repayment schedule. Information about repayment of loans should be given to borrowers during informal meetings.

4.15.2 Loan collection process

Prior to loan collection from any CBO member, the loan collection authority (the CBO manager) must be aware of:

Loan payments should be collected from CBO members according to the loan collection schedule. A receipt for the loan payment must be issued to each borrower. The suggested format for a loan collection receipt is provided in Example 19 of the Annex. If the borrowing CBO members do not repay the loan instalments according to the repayment schedule, the CBO manager must charge an additional 5 % penal interest to these members.

4.15.3 Responsibility of loan collection

Collection of the loan will be the responsibility of the CBO manager. Other executives of the CBO can assist the manager with loan collection duties.

4.15.4 Actions to defaulters

If the borrower does not repay the loan installments according to the loan repayment schedule (either due to unwillingness to repay or inability to repay) the following procedures should be adopted to collect the outstanding loan amount:

If these actions are not successful, the CBO manager, in consultation with the SDF, should take measures through the peoples court to retrieve the funds from the defaulter's personal property.

4.16 Account and Record-keeping System

CBOs must also maintain accounts or records of all transactions using the double entry system of accounting. CBOs must establish and maintain account headings for all the related transactions from the date of initiation of the transaction.

4.16.1 Vouchers

CBOs must prepare vouchers for all accounting transactions. All the bills, receipts, other related documents, etc. should be attached to the voucher in order to provide evidence of the transaction. The voucher shows which account should be debited and which account should be credited. A short narration (description) is written on the voucher to explain the transaction. An example of a voucher is given in Example 20 of the Annex.

Vouchers should be posted in both the main and subsidiary ledgers on a regular basis. For example, after loan disbursement, the amount disbursed shall be shown in the main ledger and details such as the name and address of the borrowers (along with loan amount) shall be posted in the subsidiary ledger.

4.16.2 Savings and credit ledger

Records of savings and loan transactions (disbursement, collection, outstanding, overdue, etc.) made by CBO members must be maintained on an individual basis in the savings and credit ledger. The savings and credit ledger must show details about the status of savings collection, loan disbursement, collection, the outstanding amount, the overdue amount etc. The format of this ledger is given in Example 21 of the Annex.

4.16.3 Records of loan disbursement by purpose

A separate account showing loan transactions by purpose should be maintained. The suggested format for this account is provided in Example 22 of the Annex. The CBOs should forward a summary of this account to the SDF for its records.

4.17 Loan Repayment to the SDF

Accounts of all the loans (principal + interest) collected should be kept properly and both principal and interest collected should be transferred to the SDF immediately for repayment of the loan.

  
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