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BIDDING DOCUMENTS
(Tender No. PSIC/C&M/VR-414-III)
HIRING OF SERVICES OF “A” CATEGORY CHARTERED
ACCOUNTANTS FIRMS, ENLISTED BY STATE BANK OF PAKISTAN,
FOR MONITORING & THIRD PARTY VALIDATION OF CHIEF
MINISTER’S SELF-EMPLOYMENT SCHEME (CMSES)
(OCTOBER, 2014 TO SEPTEMBER, 2016)
DIRECTORATE OF CREDIT & MARKETING PUNJAB SMALL INDUSTRIES CORPORATION,
315-ALFALAH BUILDING, THE MALL, LAHORE. PHONE: 042-99201432
EMAIL: [email protected], Website: www.psic.gop.pk
Rs.1,000/-
TABLE OF CONTENTS
Sr. No. Particulars Page No.
1. Tender Notice 01
2. Instruction to bidders 02
3. Form of bid 04
4. Form of contract 05
5. General terms & conditions 06
6. Delivery time or completion schedule 09
7. Qualification criteria 10
8. Bid evaluation criteria 11
9. Format of all securities required 13
10. Terms of References (TORs) for Chartered
Accountants Firm 14
11. Additional information: 16
12. Overview of CMSES 17
13. Service Agreement with PSIC & Akhuwat along
with Project Guide Lines 19
14. Akhuwat Operational Manual 36
15. Detail of Akhuwat Offices 73
16. PPRA Rules, 2014 80
ISO 9001:2000
CERTIFIED
PUNJAB SMALL INDUSTRIES CORPORATION
DIRECTORATE OF CREDIT & MARKETING,
327-ALFALAH BUILDING, THE MALL, LAHORE
TENDER NOTICE
(Tender No. PSIC/C&M/VR-414-III)
HIRING OF SERVICES OF “A” CATEGORY CHARTERED ACCOUNTANTS FIRMS,
ENLISTED BY STATE BANK OF PAKISTAN, FOR MONITORING & THIRD PARTY
VALIDATION OF CHIEF MINISTER’S SELF-EMPLOYMENT SCHEME (CMSES)
Punjab Small Industries Corporation (PSIC) is executing an interest free self-employment
scheme titled “Chief Minister’s Self-employment Scheme” (CMSES) with Rs.5000.00 million
on revolving basis for unemployed youth of Punjab in collaboration with M/S Akhuwat.
For validation of disbursement of Rs.6.146 billion to 306,085 loanees during 01.10.2014
to 30.9.2015 and monitoring & third party validation of expected disbursement of Rs.7.500
billion to approximately 345,000 loanees for the period 01.10.2015 to 30.9.2016, the “A”
Category Chartered Accountant Firms enlisted by State Bank of Pakistan, are requested to
submit Technical & Financial Proposals in accordance with the procedure prescribed in Rule-38-
2(a) PPRA-2014 i.e. single stage two envelop procedure. Financial Bid must be accompanied by
Pay Order/CDR in the name of “Punjab Small Industries Corporation” for a sum equal to an
amount of 5% of the overall bid value as refundable earnest money/bid security. Interested CA
Firms must furnish work plan and methodology covering the parameters i.e. Portfolio Risk, Pre-
Disbursement Plan and Process Monitoring in accordance with the Service Agreement signed
between PSIC & M/S Akhuwat and Operational Manual of the scheme.
The bidding documents can be purchased from Assistant Director (Credit & Marketing),
PSIC at Room No. 315, 3rd Floor, Al-Falah Building, The Mall, Lahore, during office hours on
submission of written application to Director (C&M), PSIC and upon payment of fee Rs.1,000/-
with Cashier of PSIC at Room No. 320, 3rd Floor, Al-Falah Building, The Mall, Lahore. The
deposit slip must accompany the technical proposal, else wise the bid will be stand rejected. The
same can be downloaded from PSIC website (www.psic.gop.pk) and PPRA website
(www.ppra.punjab.gov.pk).
The last date & time for submission of technical and financial proposals is November 04,
2015 at 12:30 pm. The tender should be dropped in the Tender Box placed at reception of PSIC
Head Office, 1st Floor, Al-Falah Building, The Mall Lahore on or before closing date & time.
The tenders will be opened on the same day at 01:00 pm in presence of the Bidding Firms. Bids
validity period shall be 120 days.
For further information and queries please contact Deputy Director (CMSES), Punjab
Small Industries Corporation, 315-Alfalah Building, The Mall, Lahore. Phone No. 042-
99201432, Email: [email protected].
Director (Credit & Marketing)
Punjab Small Industries Corporation
327-Alfalah Building, The Mall, Lahore. Phone No. 04299201432
INSTRUCTIONS TO BIDDERS
1. Bid documents can be purchased from Assistant Director (Credit & Marketing), PSIC at
Room No. 315, 3rd Floor, Al-Falah Building, The Mall, Lahore, during office hours on
submission of written application to Director (C&M), PSIC and upon payment of fee Rs.1,000/-
with Cashier of PSIC at Room No. 320, 3rd Floor, Al-Falah Building, The Mall, Lahore. The
deposit slip must accompany the technical proposal, else wise the bid will be stand rejected.
2. Tenders shall be addressed to the Director (Credit & Marketing), Punjab Small Industries
Corporation, PSIC, Room No. 315, 3rd Floor, Al-Falah Building, The Mall, Lahore.
3. Bid Security: Financial Bids must be accompanied by Pay Order/CDR in the name of
“Punjab Small Industries Corporation” for a sum equal to an amount of 5% of the overall bid
value as refundable earnest money/bid security.
4. Tender should be dropped in the Tender Box to be placed at the reception of PSIC Head
Office, 1st Floor, Al-Falah Building, The Mall Lahore, on or before time and date mentioned in
the Tender Notice.
5. Out station tenders should reach this office by Registered Post by due time & date.
Tender received through Telex /Fax and through Mail after 12:30 pm of the opening date will
not be entertained /considered.
6. Bids shall be submitted as per PPRA Rules Clause 38(2) (a) Single Stage- Two envelop
Procedure / comprise a package containing two separate envelops. Each envelop shall contain
financial & technical proposal.
7. The Envelops shall be marked as “FINANCIAL PROPOSALS” and “TECHNICAL
PROPOSALS” in bold and legible letter to avoid confusions.
8. Initially, only the sealed bid package will be opened by the Tender Opening Committee
on scheduled date and time as specified in Tender Notice in the Committee Room PSIC, 1st
Floor Al-Falah Building, The Mall, Lahore in the presence of bidders who may like to present.
9. Envelops marked “TECHNICAL PROPOSALS” shall be opened by the Technical
Committee on suitable date and time.
10. Envelops marked “FINANCIAL PROPOSALS” of the technically accepted bids shall
only be opened publically at the time and place to be announced by the Financial Committee.
Participated bidder will be informed accordingly.
11. The Financial Proposal of the bid found “Technically Non-Responsive” shall be returned
un-opened to the respective bidders.
12. The bid found to be the lowest evaluated shall be accepted.
13. Conditional / in complete quotation will be liable for rejection.
14. The rate should be quoted in Pak Rupees in words and figures and should be firm and
final.
15. The bidder shall absorb inland Delivery Charges involved in the delivery of items to
indicated sites and other overheads, duties, tax margins, and other contingencies expenses etc. in
the unit prices of the quoted equipments, as the same will not be separately payable by the
purchaser.
16. Prices should include all applicable taxes, duties, cost of transportation and
installation/commissioning charges up to the designated sites. The bidder should be fully and
completely responsible to the purchaser for all the deliverables.
17. No negotiations of any sort for reduction or compromise on the prices are expected once
bids are opened.
18. The bidder should note that fluctuation in currency rate, taxes or duties etc. shall not be
considered for enhancement of unit price at any cost.
19. Offered goods shall be in conformity with the given specifications. Any substantial
deviations from the specifications will render the bid unacceptable.
20. Advertisement may also be viewed on website www.psic.gop.pk and
www.ppra.punjab.gov.pk.
21. Following may be contacted for further details:
Deputy Director (CMSES), Punjab Small Industries Corporation, 315-
Alfalah Building, The Mall, Lahore. Phone No. 042-99201432, Email:
[email protected] during office hours on any working day.
22. Bidders should note that each and every page of the bid documents shall be signed
and stamped by the bidders and will be submitted with the bid.
FORM OF BID
The Director (C&M),
Punjab Small Industries Corporation,
Room No. 315, 3rd Floor, Al-Falah Building, The Mall,
Lahore
Subject :- TENDER NO. PSIC/C&M/VR-414-III FOR HIRING OF SERVICES OF
“A” CATEGORY CHARTERED ACCOUNTANTS FIRMS, ENLISTED
BY STATE BANK OF PAKISTAN, FOR MONITORING & THIRD
PARTY VALIDATION OF CHIEF MINISTER’S SELF-EMPLOYMENT
SCHEME (CMSES).
Reference tender notice dated _______ appeared in __________, we the
undersigned agree to provide our services for validation of disbursement of Rs.6.146 billion to
306,085 loanees during 01.10.2014 to 30.9.2015 and monitoring & third party validation of
expected disbursement of Rs.7.500 billion to approximately 345,000 loanees for the period
01.10.2015 to 30.9.2016 under “Chief Minister’s Self-employment Scheme” (CMSES).
Particulars Amount
in PKR
1. Validation of disbursement during 01.10.2014 to 30.9.2015
i. Random selection of branches up to 10% located in 36 districts of Punjab
ii. Random selection of loanees from each selected branch up to 5%
iii. Quarterly Validation/verification of loanees, on sample basis up to 1% of the total
Sub Total (1)
2. Monitoring & third party validation for the period from 01.10.2015 to 30.9.2016
i. Random selection of branches up to 10% located in 36 districts of Punjab
ii. Random selection of loanees from each selected branch up to 5%
iii. Quarterly Validation/verification of loanees, on sample basis up to 1% of the total
Sub Total (2)
Grand Total (1+2)
TOTAL Rs. ___________________
(Rupees ________________________)
Signature: _______________
Dated: __________ Name: _______________
M/S: _______________
Address: _______________
Continue on additional pages if necessary
FORM OF CONTRACT
The contract will be mutually finalized with selected Chartered Accountants Firm in the light of
Service Agreement with Akhuwat, Akhuwat’s Operational Manual and Terms of References for
Chartered Accountants Firm.
GENERAL TERMS & CONDITIONS
1. Bid Validity. The offer will remain valid for a period of 120 days from the date of
opening of bid. PSIC may request to extend the validity period and successful bidder shall
extend the same along with bid security validity accordingly.
2. Bid Security. Bidders are required to submit along with their bid 5% of the value of
total bid as bid security in the shape of Pay Order / CDR in the name of “Punjab Small
Industries Corporation”. Bid security in shape of cheque will not be acceptable.
3. The bid security (Pay Order/CDR) will be returned to unsuccessful bidders within fifteen (15) days
after award of contract /issuance of purchase order to the winning bidder.
4. The bid security of the successful bidder may be converted as part of the 1st payment on the written request of the winning bidder.
5. The bid security may be forfeited if the bidder withdraws the bid during the period of its validity or if the successful bidder fails to accept the purchase order / sign the contract within the respective due date.
6. Acceptance of Bid / Award of Contract: subsequent to approval of the proposal
(technical proposal and financial proposal) and finalization of bid process, the contract
may be awarded to the lowest bidder who has quoted the lowest rate in accordance with
the Punjab Procurement Rules-2014.
7. No dispute can be raised by any bidder whose bid has been rejected and no claim will be
entertained or paid on this account.
8. After Acceptance of the bids by the purchaser, the bidder shall have no right to withdraw their bids or claim higher price.
9. Letter of acceptance. After acceptance of the bid, a letter of acceptance / advance acceptance of tender will be issued only to the successful bidder(s).
10. Installation / Commissioning: Completion of assignment as per approved TORs OR specification according to the entire satisfaction of the ultimate consignee within the scheduled period will be made by the successful bidder.
11. Inspection: Comprehensive inspection regarding its quality as per offer of bidder will be carried out by the ultimate consignee or his representative who will issue an Inspection Certificate in token of having carried out Inspection strictly as per PSIC’s approved specifications. The successful bidder will accord all necessary facilities to him for the purpose.
12. Acceptance: The ultimate consignee will issue the acceptance certificate (receipt certificate / inspection certificate etc.) in the prescribed format and based on that respective payment will be released.
13. Advance - No advance will be paid. - No split / peace meal advance will be paid for any item.
14. Billing – Payment-Taxes
i. All payments will be made in Pakistani rupees only.
ii. Subject to fulfillment of others terms and conditions of bid documents / purchase order on receipt of necessary certificate from the ultimate consignee. The successful bidder shall raise the payment invoice for the services rendered to the ultimate consignee. The same shall be presented to Director (C&M), Punjab Small Industries Corporation, Room No. 315, 3rd Floor Al-Falah Building the Mall, Lahore, in the prescribed format.
iii. Taxes. The successful bidder shall have full and exclusive liability for payment of all duties taxes and other statutory payments payable under any or all of the statutes / laws etc … now or hereafter imposed in Punjab, Pakistan.
iv. Withholding/Income Tax etc. on the amount invoiced to PSIC shall be deducted at source as per Income Tax Law. The bidder along with bids shall furnish proof of registration with Income Tax Department.
v. Availability of GST number and deduction of Sales/Income tax as per Rules. (If supplier is exempted from Tax, exemption Certificate may be provided).
15. No offer shall be considered if:-
Received without earnest money/bid security It is received after time and date fixed for its receipt. Tenders unsigned. The offer is ambiguous. The offer is conditional. The offer is from black listed firm. The offer is received by telegram. The offer is received shorter validity than the required in the tender enquiry.
The offered stores are not confirming to specifications indicated in the tender enquiry. The bidders engaged in corrupt or fraudulent practices (including collusion/ pooling)
will be declared totally ineligible either indefinitely or for a stated period of time and blacklisted from being awarded any such contract financed by the Govt. of the Punjab.
Failure and Termination If you fail to conduct the assignment within the agreed
period, the PSIC shall be entitled at the option either:
To recover from you, as liquidated damages and not as
penalty, a sum equivalent to 2% of the amount quoted by
the firm for respective assignment.
16. The under mentioned Certificate must be signed failing which the offer shall not be
entertained/considered.
CERTIFICATE
We hereby confirm to have read carefully the TORs for carrying out the exercise of
monitoring and third party validation of CMSES and all the terms & conditions of tender
enquiry due for opening on ____________ at __________. We agree to abide all these
terms & conditions. We also hereby categorically confirm that the services offered by us
will be in accordance with the requirements / TORs mentioned in the bid documents. A bank
draft/pay order as bid security is enclosed in sealed financial proposal.
SIGNATURE
Seal of the Office of the Bidder
Name & Address of the Bidder
****
DELIVERY TIME OR COMPLETION SCHEDULE
i. The selected chartered accountant firm shall be responsible for complete the
assignment within the time schedule and deliver the required reports to PSIC
according to timeline agreed in the contract.
ii. Complete delivery from the place of firm to the Director (C&M), Punjab Small
Industries Corporation, Regional Office, Room No. 315, 3rd Floor Al-Falah Building
the Mall, Lahore, shall be made by the contractor as per ultimate consignee address
provided in the bidding documents / to be provided to the suppliers by the purchaser.
iii. The locations and respective quantity may be changed and final list will be provided
to the successful bidder by the purchaser/ultimate consignee.
iv. Insuring the goods in transit is the responsibility of the suppliers.
QUALIFICATION CRITERIA
1- “A” category Firm as per enlistment by State Bank of Pakistan
2- Registration with Institute of Chartered Accountants of Pakistan (ICAP)
3- NTN certificate
BID EVALUATION CRITERIA
Sr.
No. PARTICULARS
MAXIMUM
WEIGHTAGE
A. FIRM LEGALITY
1 Firm affiliation with international companies
(Benchmark: Affiliated = 10 & Non-affiliated = 0) 10
2 No. of years of affiliation
(Benchmark: 1 score for three years) 05
3 Duration of entitlement in “A” Category with State Bank of Pakistan
(Benchmark: Divide total weightage by no. of total years of inception of category system
to find score per year)
10
4 Having Registration with Registrar of Firms.
(Benchmark: Registered = 03 & Non-registered = 0) 03
5 Nature of affiliation (Member, Associate, Representative Firm)
(Benchmark: Member = 07, Associate = 05, Representative Firm = 03) 07
TOTAL 35
B. FIRM PROFILE
1 Audit experience
(Benchmark: Every 10 years has 3 scores) 09
2 No. of qualified Team Members and Partners (including their qualification,
experience and duration with the firm)
(Benchmark: 01 score for 05 CAs & 01 score for 10 ACCAs)
09
3 Overall clientele (Long term & short term and firm particulars)
{Benchmark: Corporate Banks = 02 (01 score for 05 Corporate Banks), NGOs = 02 (01
score for 05 NGOs) and No. of clients = 02 (01 score for 10 clients)}
06
4 Geographic spread in Punjab at Divisional Level
(Benchmark: 01 score for Lahore division and 1/2 score for other division) 03
5 Score in Quality Control Rating (QCR) by ICAP
(Benchmark: exist in QCR = 03 & No-existence in QCR = 0) 03
6 Previous experience of carrying out monitoring & validation exercise (same nature)
(Benchmark: 01 score for Monitoring &Validation of 01 project) 05
TOTAL 35
C. TECHNICAL ANALYSIS
Work plan / Monitoring methodology on:
1 Portfolio Risk
(Based upon Service Agreement, TORs and Akhuwat Operational Manual) 09
2
Pre-disbursement Plan
(Based upon Service Agreement, TORs and Akhuwat Operational Manual)
Indicate separate proposed fee for audit on sample basis up to 5% at branch level located
in 36 districts of Punjab.
12
3
Process Monitoring
(PSIC – Akhuwat & Akhuwat - Loanees)
Estimates to be given for random selection of branches up to 10% located in 36 districts
of Punjab.
Estimates to be given for random selection of loanees from each selected branch up to 5%
For Quarterly Validation/verification of loanees, estimates to be given for 1% on sample
basis of the total
09
TOTAL 30
TOTAL WEIGHTAGE 100
Continued…
IMPORTANT:
i. The CA Firms fulfilling the technical criteria with at least 65% marks shall be
selected for opening of their financial bids.
ii. Least cost method will be used for selection of the CA Firm.
iii. Financial bid may include all taxes applicable in Punjab.
FORMAT OF ALL SECURITIES REQUIRED
o Pay orders, Call deposit receipts duly issued from the scheduled banks.
Annexure - A
PROJECT GUIDELINES
1. PROJECT BACKGROUND
1.1 The Chief Minister, Punjab constituted a Committee on 30.4.2011 under the
Chairmanship of Mr. Mohammad Pervaiz Malik MNA to determine the broad parameter
of collaboration between PSIC and Micro Finance Partner Firms (eligible through
competition) to launch a loaning scheme under reference for the skilled / un-skilled
unemployed youth.
1.2 The Committee met on 2nd May, 2011 and recommended that the Govt. of the Punjab
may provide interest free loan to PSIC which will be utilized through the Micro Finance
Partner Firm duly selected on merit for disbursement of funds to the target groups.
1.3 Similarly, it was decided that the Partner Firm should be selected through a transparent
process in line-with eligibility criteria approved by the Committee followed by signing of
a legal agreement between PSIC and the qualified Partner Firm, specifying their roles and
area of responsibilities.
1.4 Subsequently, in a meeting held on 05.05.2011 Chaired by Chief Minister Punjab it was
decided that PSIC would develop a Micro Finance Self Employment Scheme
accommodating preferably female graduates and un-employed youth possessing diploma
/ certificate from TEVTA & PVTC. Government of the Punjab allocated an amount of
Rs.1000.00 million as loan to PISC under Self Employment Scheme for un-employed
youth for the year 2011-12.
1.5 Subsequently, PSIC advertised the Expression of Interest in the Newspapers, which
appeared in daily Nation & Naw-e-Waqt on 10.5.2011 inviting technical and financial
proposals for submission by 30.5.2011.
1.6 In response thereto, three (3) Expressions of interests were received as under:-
I. M/s. Akhuwat Lahore.
II. M/s. Community Reforms Foundation, Islamabad.
III. Women Social Organization, Lahore.
1.7 The proposal for launching / approval of the scheme was presented and discussed in 78th
meeting of PSIC Board of Members and decided that contesting Micro Finance Firms
will make detailed presentation about their area of activities. In its 79th Meeting of PSIC
Board of Members held on 25.6.2011, the representatives from all the three firms were
given an opportunity to present their credibility. The Recommendations of PSIC Board
are hereunder:-
a) The scheme should be termed as a “Pilot Project” and introduced at Divisional
level.
b) The qualified Micro Finance Firm should use the logo of Govt. of the Punjab and
PSIC in its documentations.
c) The public awareness campaign and media advertisement should be done under
the aegis of Government of the Punjab.
d) It was decided that Finance Department, Government of the Punjab should
exclusively monitor the implementation of the scheme to ensure accuracy and
transparency for the use of this public fund. The Member Board representing
Finance Department, Government of the Punjab expressed their inability and
incapacity to this affect.
e) A High Power Steering Committee was recommended to be constituted inclusive
of MPAs/MNAs of the respective areas of the Punjab, Secretary Social Welfare,
Secretary Finance, Secretary (P&D), Secretary Labor, Secretary Industries,
Commerce & Investment, Chief Executive Officer Micro Finance Partner Firms,
Chairman, PVTC, Chairman, TEVTA, Member from Academia and one female
Member from Civil Society. It was further recommended that this Committee be
Chaired by the Chief Minister Punjab.
1.8 The above position was submitted to Chief Minister Punjab and he very kindly
constituted a Steering Committee of the following:-
i. Mr. Muhammad Pervaiz Malik, MNA
ii. Khawaja Saad Rafique, MNA
iii. Chairman, P&D Board
iv. Chairman, TEVTA
v. Chairman, PVTC
vi. Secretary Social Welfare
vii. Secretary P&D
viii. Special Secretary Finance
ix. Managing Director, PSIC
1.9 The 1st meeting of the Steering Committee was held on 12.8.2011 under the
chairmanship of Mr. Muhammad Pervaiz Malik, MNA duly attended by Chief Secretary,
Punjab. After detailed deliberations, following decisions were taken:-
i. Since PSIC has relevant experience and mandate of executing loaning schemes,
therefore, PSIC may implement this loaning scheme of Rs. 1000.00 Million, for
which necessary funds have already been allocated by Finance Department.
ii. PSIC has already done some ground work and invited Expressions of interest
(EOI) through advertisement and PSIC Board feels that M/s. Akhuwat is the best
among the three Micro Finance Firms for execution of the project. However, in
order to address the reservations / observations of PSIC Board, M/s Akhuwat may
be asked to make a presentation before the Steering Committee tentatively on
Wednesday 17th August-2011 at 11:30 a.m in Committee Room of S & GA
Department.
iii. Following M/s Akhuwat’s presentation before the Steering Committee,
recommendations thereof may be discussed and finalized in joint meeting of
Steering committee and PSIC BOM under the chairmanship of the Chief Minister
Punjab.
1.10 2nd meeting of Steering Committee was held on 18.8.2011 under the chairmanship of
Mr. Muhammad Pervaiz Malik, MNA and Dr. Amjad Saqib, Executive Director,
Akhuwat gave a presentation regarding concerns raised by PSIC Board of Members.
1.11 After detailed deliberations, it was agreed that a joint meeting of members of Steering
Committee and PSIC Board of Members would be held with Chief Minister, Punjab to
decide the Micro Finance Partner Firm (MFPF) for disbursement of small loan.
1.12 Accordingly, a meeting of Steering Committee on Small Loans was held on 24.8.2011
under the Chairmanship of Chief Minister Punjab decided as under:-
a. The execution agency would be PSIC which would enter into a Service
Agreement with the selected Micro Finance Service Provider and the service
agreement would be approved by the PSIC Board.
b. PSIC would create a Self Employment and Entrepreneur Assistance Fund with the
earmarked amount of Rs. 1 Billion in F.Y 2011-12.
c. Institutional Mechanism would be through transfer of Rs. 1 Billion earmarked in
budget estimate 2011-12 to a separate account in PSIC to be used exclusively for
PSIC – Self Employment Scheme.
d. A sub-committee consisting of following would draw up a comprehensive product
plan and would present a draft legal agreement containing all the necessary details
to be discussed in next joint meeting of steering committee and PSIC Board on
29th August 2011:- (The meeting was postponed which could not been held)
i. Chairman P&D
ii. Secretary Industries
iii. Secretary Finance
iv. Chairman PVTC
v. Chairman TEVTA
vi. Dr. Ali Cheema,
vii. Dr. Naved Hamid
viii. Syed Nabeel Hashmi,
ix. Mr. Almas Hyder,
x. M. D PSIC
e. Committee would develop technical – professional based loaning product plans
based upon necessary input from TEVTA, PVTC & Social Welfare Deptt.
f. Committee would suggest innovative means to short list eligible loanees for
example by holding business plan competition between TEVTA, PVTC &
Sanatzar un-employed certificate / diploma holders.
g. Chief Minister decided the Steering Committee & Coordination Committee would
ensure the necessary timelines and transparency of the Govt. of Punjab, PSIC –
Self Employment Scheme role.
h. Steering Committee would inform Chief Minister about the progress of the Govt.
of Punjab, PSIC –Self Employment Scheme.
1.13 In the light of directions given by Chief Minister Punjab, the scheme was initiated during
2011-12 and the Service Agreement was signed between PSIC and Akhuwat.
Government of the Punjab added Rs.1000.00 million during 2012-13 and the same
service agreement was replicated for the scheme. Now, Government of the Punjab further
added Rs.1000.00 million during 2013-14 in this scheme and the same service agreement
is being replicated to execute the scheme through Akhuwat.
2. THE PROJECT
2.1. The Government of the Punjab plans to provide small interest free loans to support small
scale entrepreneurs. It has allocated Rs. 1000 million for this purpose. The project will be
implemented by Punjab Small Industries Corporation – PSIC in collaboration with
AKHUWAT with financial support from Government of the Punjab.
2.2. The said amount will be utilized in the form of a revolving fund to give out small interest
free loans over a period of 5 years. The interest free loans given under this project will be
utilized to fund small start-up businesses and existing businesses which need capital to
grow further, and will range in amount up to PKR 50,000.
2.3. The fund of Rs. 1,000 million provided in the first year will be revolved, creating
manifold wealth generation and employment opportunities for thousands of people over
the project period of 5 years. The decision of Chief Minister Punjab dated 18.4.2014 will
be the integral part of service agreement and project guidelines (Annexure “B”).
3. TOTAL COST
3.1. The project will require a revolving fund of PKR 1,000 million for interest free micro
lending. This amount however does not include service charges.
3.2. Service Charges will be charged @ 7% of the disbursed loan amounts to the
AKHUWAT.
3.3. The expenditure on monitoring and Third party validation will also be provided by
Government of the Punjab on actual basis.
4. OBJECTIVES
4.1. Provision of at least 150,000 interest-free enterprise / business loans during project
period.
4.2.Creation or consolidation and expansion of 150,000 micro businesses in Punjab.
4.3. Creation of 150,000 jobs through enterprises imitated by interest-free loans.
5. PROJECT DURATION
5.1 Five (5) years from the signing of the Service Agreement. Once the project duration
comes to end, following two options may be considered:-
5.2 Termination
In such a case the funds disbursed as loans will be gradually taken out of the project and
returned to the Government of Punjab.
5.3 Continuation
In case Government is satisfied with the progress of the project, it may continue under a
new agreement and may add more funds for further expansion.
6. PRODUCT AND SERVICES
6.1 These interest free loans will be given by AKHUWAT to the un-employed and skilled
persons of PVTC, TEVTA, Sanatzar’s of Social Welfare Department and other Technical
Training Institutes in the Public & Private Sector. Besides the target group, any applicant
having a good business plan and expertise will also be considered. Akhuwat shall
preferably utilize Rs.1000.00 million in following manner:
a. 50% loans as per previous practice / Business as usual
b. 25% for skilled human resources (formal & informal skilled)
c. 25% for people living below the poverty index of 25.
The borrowers should however be economically active and capable of doing a business.
6.2 In addition, interest free loans will be given by AKHUWAT for the establishment of a
new business or the expansion of an existing one, enabling the borrowers to set up
sustainable and independent businesses. AKHUWAT will visit PVTC, TEVTA, Sanatzar
and other institutes in its operational areas to introduce the loaning programme, raise
awareness and facilitate access of loans to graduates of these institutes. These loans will
be intended for the whole family, not targeting only male or female members of the
household, thereby strengthening the social fabric. However, the business will be
undertaken by any one from the family who has the expertise.
7. METHODOLGY
7.1 Funding arrangement of project will be based upon a revolving fund of PKR 1,000
million that the Government of Punjab will lend to Punjab Small Industries Corporation
which will in turn constitute this fund and outsource its management to AKHUWAT. The
funds will be released to the AKHUWAT within 15 days of signing the service
agreement. The following two accounts will be essential for the flow of funds for the
whole project.
7.2 Credit Fund Account
A credit pool will be established for the project by the AKHUWAT. All credit
disbursements will be made from this account.
7.3 Recovery Fund Account
A separate account will be maintained for loan recoveries. All recoveries of due
installments from borrowers will be deposited in this account. Funds will be transferred
from the Recovery Fund account to Credit Fund account on regular basis and hence the
funds will be revolved and redistributed.
7.4 Potential borrowers will submit their applications, for individual as well as group loans to
AKHUWAT. Applications will be approved through the given eligibility criterion,
prioritizing skilled workers and women. The AKHUWAT will carry out its due appraisal
process and gauge the applicant’s creditworthiness. The loan approved by the
AKHUWAT will be finalized by the Loan Approval Committee of AKHUWAT. This
will lead to the loan disbursement and social guidance session where the cheques will be
given out. Decision taken by Loan Approval Committee will be final. All disbursements /
recovery procedures will be done according to procedure of AKHUWAT and Operating
Manuals.
8. TARGET GROUPS
8.1 The project will focus on those people who are motivated towards self-employment.
Seeking a more equitable distribution of resources, project will prioritize its services for
following groups:
a. Small Scale Entrepreneurs
b. Un-employed & skilled persons, and
c. Un-skilled person who intends to start up or expand business and is willing to
acquire relevant expertise / skills from Technical Institutions for effective
utilization of loans.
d. Akhuwat shall preferably utilize Rs.1000.00 million in following manner:
i. 50% loans as per previous practice / Business as usual
ii. 25% for skilled human resources (formal & informal skilled)
iii. 25% for people living below the poverty index of 25.
The borrowers should however be economically active and capable of doing a business.
8.2 SKILLED WORKERS
Skilled and trained workers have the greatest potential to contribute to the country’s
economy by filling in the right supply and demand gaps. AKHUWAT will prioritize
providing these interest-free loans to skilled workers so that they can reach their full
potential quickly and enhance productivity in their respective industries. A focus on
skilled workers can spur employment generation as they are more likely to start-up their
own businesses, rather than looking for already scarce jobs.
8.3 The regular screening process will still be applied rigorously i.e. (a) social appraisal and
(b) economic appraisal. By social appraisal it is meant that the applicant has an enviable
social capital and reputation. He/she will be required to produce guarantors for his
character and trustworthiness. The economic appraisal will gauge the need for the loan
and more importantly having a sound business plan use the loan money at.
8.4 AKHUWAT and PSIC will link-up with the following institutions to seek out eligible
candidates for these loans:
i) TEVTA
ii) PVTC
iii) Sanatzar
iv) Other Public and Private Training Institutes.
v) Existing borrowers of AKHUWAT and other Microfinance Institutions
(who fall under skills category – not for vegetables or fruit shops).
9. ELIGIBILITY
9.1 The proposed eligibility criteria is set out as follows: (This may be modified at a later
stage depending upon evolving demand)
i. The applicant should have a valid CNIC,
ii. Living within the jurisdictions of the working of AKHUWAT branch (gradually
covering all districts).
iii. The applicant should have a good social standing and social capital,
iv. Between 18 to 62 years of age,
v. Should be a local resident with demonstrable entrepreneurial ability and business
related skills,
vi. Should have a viable business plan,
vii. Is not a defaulter of any bank or microfinance institution,
viii. Preference would be given to:-
a. Un-employed and skilled persons of Sanatzar’s of Social Welfare Department,
TEVTA, & PVTC and other private and public Technical Training Institutes.
b. Small Scale Entrepreneurs.
c. Previous borrowers of AKHUWAT or other MFIs (if they are skilled
workers).
9.2 ACCEPTABLE BUSINESS PURPOSES/PROFESSIONS
i. AKHUWAT will not provide loans for/to:
a. Illegal business or activity which is prohibited by law
b. Speculative purposes
ii. Similarly AKHUWAT will not advance credit for the businesses mentioned below.
Activities relating to or dealing with any sort of:
a. Narcotics; with the exclusion of tobacco;
b. Alcoholic beverages;
c. Ammunition and explosives;
d. Smuggling;
e. Goods intended for military or paramilitary purposes.
10. LOAN SIZE
Upto Rs. 50,000/- each loan
11. COST TO THE BORROWER
The costs involved in applying for a loan will be as follows:
Application Fee Interest Mutual Support Fund Service Charges
PKR 200/- 0% 1% (of loan) 0%
The application fee mentioned above has been implemented to maintain seriousness in
applicants that only those who really require this facility come and apply. This fee will go
to AKHUWAT to meet administrative funds.
The mutual support fund is a small contribution by the borrower paid at the finalization
of his loan. This support fund is utilized towards waiving the loan in case of the
borrower’s death or permanent disability.
11.1 LENDING METHODOLOGY
AKHUWAT will follow both group and individual lending methodologies. In group
lending methodology groups of 3 to 6 members will be formed, all group members would
guarantee loans and credentials of other group members. Whereas, in individual lending
individuals will provide two personal guarantees as social collateral against the loan. In
case of bigger loans, AKHUWAT obtains cross cheques as collateral. All loan appraisals
& approvals, cheque disbursements, recovery procedures, data gathering & recording and
all other operations will be followed in accordance with the manuals of AKHUWAT.
11.2 SCRUTINY OF BUSINESS PLANS
Through the scrutiny of business plans the business idea of the intended borrower will be
evaluated to see if it is viable and whether it can generate income beyond the household
expenses sufficient for loan repayment. This will also help fine-tune the applicant’s
business idea itself. The applicant’s family will also be interviewed to make sure that
they know about the loan and support the business idea.
11.3 GUARANTORS OF LOANS
In cases of individual lending every borrower will provide two guarantors who vouch for
his/her credentials and accept the responsibility of monitoring the borrower and give
assurance to persuade the borrower for timely payment of loan. One guarantor may be
from the family and second should be a friend/acquaintance knowing the borrower
thoroughly, whereas in group lending the members of the group would guarantee each
member of the group.
11.4 ENSURING PARTICIPATION & TRANSPARENCY
Promoting awareness and participation on one hand and transparency and accountability
on the other are extremely important in projects being run with public money. Special
efforts will be made towards making the above mentioned steps as open as possible. For
this purpose, AKHUWAT will submit its schedule of disbursements. The dates for these
disbursement events will be provided to PSIC as that maximum participation of the
following stakeholders can be ensured:
i. Public representatives
ii. Press
iii. PSIC representatives
iv. Divisional/district administration representatives
12. PROJECT COORDINATION COMMITTEE (PCC)
12.1A Project Coordination Committee will be formed comprising of following members:
i. Secretary IC&I Department Chairman
ii. MD, PSIC Secretary/Member
iii. Additional Secretary Finance Member
iv. Representative from AKHUWAT Member
12.2 The PCC will be responsible to monitor the implementation of the project. The
committee will meet on monthly basis and co-ordinate with all partners and
stakeholders.
13. IMPLEMENTATION AND OVERSIGHT COMMITTEE (I&OC):
i. Chief Secretary, Punjab
ii. Finance Secretary
iii. Secretary, Industries, Commerce & Investment Department
iv. Secretary, Excise & Taxation Department
v. MD PSIC
I&OC have been constituted to monitor the progress of the scheme on quarterly basis.
14. REPORTING
13.1 AKHUWAT will submit monthly progress report to the Project Coordination
Committee (PCC) and quarterly reports to the PSIC Board and Implementation &
Oversight Committee (I&OC). In one glance, this report will be able to tell whether
periodic targets of loan amounts and recovery are being met or not.
13.2 AKHUWAT will reconcile recovery and disbursement accounts with bank and
designated Chartered Accountant firm; selected by PSIC Board, on monthly basis.
13.3 PSIC will be authorized to inspect the record of borrowers and meet them periodically.
These borrowers will be live testimony of the aptness and success of the project being
undertaken. All documentation will be made available to PSIC as and when required.
13.4 AKHUWAT shall be responsible to have its accounts audited by an internationally
recognized, well reputed Chartered Accountant Firm.
15. FLOW OF FUNDS
15.1Revolving Fund:
A revolving credit pool will be established for the program. All credit disbursements will
be made from this account. The PSIC shall make available to the AKHUWAT funds to
be released by Finance Department, Government of Punjab as per para 6/n to para 9/n of
Annexure – B.
15.2Recovery Fund:
A separate account will be maintained for loan recoveries.
16. PROJECT STEERING COMMITTEE
A following Project Steering Committee was constituted by the Chief Minister Punjab
dated 08.7.2011 to steer the project and take all policy decisions with regards to project.
i. Mr. Muhammad Pervaiz Malik Co-Chairman
ii. Khawaja Saad Rafique Co-Chairman
iii. Chairman, P&D Member
iv. Chairman, TEVTA Member
v. Chairman, PVTC Member
vi. Secretary Social Welfare Member
vii. Secretary P&D Member
viii. Special Secretary Finance Member
ix. Managing Director, PSIC Member
x. Nominee of PSIC Board Member
xi. Executive Director AKHUWAT Member
17. THIRD PARTY MONITORING/VALIDATION
Third party monitoring will be conducted as per provisions of para 6 (iv)/n of Annexure –
B.
18. PRO-POOR, NON POLITICAL FOCUS
Pro-poor, non-political and non-sectarian dimension of project will be ensured under all
circumstances.
19. RESEARCH & PROJECT IMPACT EVALUATION
The efforts will be made to collaborate with quality educational institutions and
universities to conduct research for impact evaluation of these pioneering initiatives and
suggest other improvements. This will support in development of large scale, efficient
and effective Micro Loaning Programme in the country. This research will also help
PSIC to develop similar model in future.
ADDITIONAL INFORMATION
i. Overview of CMSES
ii. Service Agreement with PSIC & Akhuwat along with Project Guide
Lines
iii. Akhuwat Operational Manual
iv. Detail of Akhuwat Offices
v. PPRA Rules, 2014
vi. Tender Notice
OVERVIEW OF
CHIEF MINISTER’S SELF-EMPLOYMENT SCHEME (CMSES)
On the directions of Chief Minister Punjab, Punjab Small Industries Corporation (PSIC)
initiated an interest free credit assistance scheme titled “Chief Minister’s Self-employment
Scheme” (CMSES) for un-employed and skilled persons of PVTC, TEVTA, SANATZAR’s of
Social Welfare Department and other Technical Training Institutes in the Public & Private Sector
(Group – A). Besides the Group - A, any other applicant having a good business plan and
expertise is also considered under this programme.
Government of the Punjab allocated Rs.7000.00 million in Budget Estimates of 2011-12,
2012-13, 2013-14, 2014-15 & 2015-16 on revolving basis as interest free loan to PSIC for
subsequent transfer to Service Provider Organization (SPO) for interest free micro financing.
M/S. Akhuwat (NGO) has been selected as SPO through competitive selection process.
Up till July 31, 2015, M/S. Akhuwat has disbursed an amount of Rs. 12.669 billion to
691027 beneficiaries including 300719 female entrepreneurs in 33 various vocations / trades
with the recovery rate of 99.89% in 36 districts of Punjab through 272 field offices.
The district wise position is hereunder:-
Districts No. of Loans
Male Loans
Female Loans
Active Loans
Amount Disbursed (Rs.)
Recovery %
Attock 20,009 2,682 7,327 10,875 375,970,000 99.72
Bahawalnagar 22,173 14,694 7,479 10,665 414,585,000 100.00
Bahawalpur 27,973 13,650 14,323 15,926 494,250,000 100.00
Bakhar 2,123 1,200 923 1,403 36,018,000 99.99
Chakwal 40,944 25,039 15,905 20,411 793,940,100 100.00
Chiniot 13,410 9,752 3,658 5,826 258,628,000 99.99
DG Khan 16,712 8,058 8,654 6,680 295,932,000 99.98
Faisal Abad 49,565 25,369 24,196 24,852 896,030,000 99.70
Gujranwala 15,981 7,520 8,461 8,532 258,321,000 99.93
Gujrat 11,687 5,707 5,980 6,296 188,197,000 100.00
Hafizabad 3,560 1,827 1,733 2,421 60,202,000 99.97
Jhang 6,435 3,002 3,433 3,701 114,576,000 99.98
Jhelum 21,607 12,489 9,118 11,937 392,102,000 99.99
Kasur 27,078 14,894 12,184 13,903 515,331,000 100.00
Khanewal 21,403 16,910 4,493 7,595 409,286,000 99.89
Khushab 3,740 2,454 1,286 2,796 65,575,000 99.99
Lahore 102,399 48,432 53,967 44,284 1,972,341,000 99.99
Layyah 6,475 1,939 4,536 6,456 102,092,000 99.99
lodhran 12,735 7,788 4,947 5,205 237,379,000 100.00
Mandi Bahudin 9,549 6,558 2,991 5,670 177,978,000 99.99
Mianwali 5,370 2,713 2,657 3,859 91,599,000 99.95
Multan 22,475 8,211 14,264 10,280 420,143,000 99.76
Muzaffargarh 26,151 20,486 5,665 11,607 494,699,000 99.33
Nankana Sahib 7,420 3,972 3,448 4,306 139,026,000 100.00
Narowal 3,857 2,576 1,281 3,014 70,845,000 99.98
Okara 12,673 9,584 3,089 7,359 217,997,000 99.97
Pakpatan 7,013 4,850 2,163 2,969 119,728,000 99.99
Rahim yar khan 6,708 3,133 3,575 6,687 108,000,000 100.00
Rajanpur 21,675 13,691 7,984 8,360 398,978,000 99.58
Rawalpindi 36,897 18,892 18,005 13,472 686,274,000 99.80
Sahiwal 13,005 10,622 2,383 6,165 237,108,000 99.98
Sargodha 37,688 21,204 16,484 15,528 686,764,000 100.00
Sheikhupura 21,357 9,992 11,365 11,467 376,542,000 99.99
Sialkot 9,041 4,808 4,233 5,747 151,563,500 100.00
Toba Tek Sing 12,637 7,828 4,809 6,507 216,754,000 99.61
Vehari 11,502 7,782 3,720 7,127 194,454,000 99.65
Total 691,027 90,308 300,719 339,888 12,669,207,600 99.89
Following Two committees have been constituted to monitor the progress of the scheme
on monthly and quarterly basis:-
1- Project Coordination Committee (PCC):
i. Secretary, IC & ID, Government of the Punjab
ii. Managing Director, PSIC
iii. Additional Secretary (Economic Services), Finance Department, Government of
the Punjab
iv. Dr. Muhammad Amjad Saqib, Executive Director, Akhuwat,
v. Dr. Naved Hamid, Member PSIC Board / Co-opted Member PCC
vi. Dr. Ali Cheema, Member PSIC Board/ Co-opted Member PCC
2- Implementation and Oversight Committee (I&OC):
vi. Chief Secretary, Punjab
vii. Finance Secretary
viii. Secretary, Industries, Commerce & Investment Department
ix. Secretary, Excise & Taxation Department
x. MD PSIC
SERVICE AGREEMENT
This Service Agreement is made at Lahore this ______day of ___________ 2014
BETWEEN
THE PUNJAB SMALL INDUSTRIES CORPORATION (PSIC), established in July 1973
under PSIC Act having its registered office at 4th Floor LDA Plaza, Egerton Road, Lahore is
actively engaged in promotion, development and support of small, cottage and household
industries in Punjab. PSIC’s mission is to promote and develop Small Scale Industries through
provision of credit, infrastructure and technological support contributing to employment
generation, poverty alleviation and socio-economic uplift of the province, along with
preservation and development of handicrafts and promotion of artisans, through its Managing
Director, (hereinafter referred to as the Competent Authority, which expression shall include its
successors-in-interest, attorneys and assigns) Party of the First Part.
AND
M/s AKHUWAT established in 2001 under Societies Registration Act, 1860 having its
registered Head Office at House No. 382, Block 15, Sector B-1, Township, Lahore with the
objective of poverty alleviation through micro financing, educational support programmes,
health services and social guidance to the under privileged section of the society. AKHUWAT
has been operating in this field for the past twelve years and has disbursed more than PKR 5.5
billion to around 328,000 families in the form of micro-loans, which have all been interest-free,
through its Executive Director, (hereinafter referred to as the Competent Authority, which
expression shall include his successors-in-interest, attorneys and assigns) Party of the Second
Part.
PUNJAB SMALL INDUSTRIES CORPORATION i.e. PSIC and M/s AKHUWAT
hereinafter are collectively referred to as the “Parties”
WHEREAS The PSIC Board is desirous of lending to the poor and deserving entrepreneurs and
AKHUWAT is willing to undertake interest free micro lending activities for supporting small
scale entrepreneurs with funds amounting to PKR 1,000 million during the year 2013-14. The
project will be executed in collaboration between PSIC and AKHUWAT with financial support
from Government of the Punjab. The Government of the Punjab will lend a fund of PKR 1,000
million to PSIC which will lend this amount to AKHUWAT for interest free micro-lending for
supporting small scale entrepreneurs. The loans given under this project will be interest free and
be utilized to fund small start-up businesses and existing businesses which need capital to grow
further and will range in amount up to PKR 50,000/- only.
The fund of Rs. 1,000 million provided in the first year will be revolved, creating manifold
wealth generation and employment opportunities for thousands of people over the project period
of Five (5) years.
AND WHEREAS M/s AKHUWAT has agreed to provide the services on the terms and
conditions set forth in this Service Agreement.
NOW THEREFORE the parties hereby agree as follows:
Section
No. Articles
Article 1: Services
1.1 AKHUWAT shall perform the services under this Service Agreement in accordance with
the provisions of this agreement, terms of reference set forth in project guidelines and in
accordance with the attached annexes which are integral part of the Service Agreement.
1.2 AKHUWAT will commence the services as soon as possible but not later than fifteen
days after release of funds and service charges to AKHUWAT.
1.3 The project will be executed according to policies and procedures of AKHUWAT’s
Operational Manual. These will be submitted to PSIC along with work plan within
fifteen days of signing of Service Agreement. Updated manual will be provided annually
to PSIC.
Article 2: Responsibilities of M/s AKHUWAT
2.1 AKHUWAT shall provide interest free loans to the un-employed and skilled persons of
PVTC, TEVTA, SANATZAR’s of Social Welfare Department and other Technical
Training Institutes in the Public & Private Sector (Group – A). Besides the Group - A,
any applicant having a good business plan and expertise will also be considered.
Akhuwat shall preferably utilize Rs.1000.00 million in following manner:
a. 50% loans as per previous practice / Business as usual
b. 25% for skilled human resources (formal & informal skilled)
c. 25% for people living below the poverty index of 25.
The borrowers should however be economically active and capable of doing a business.
2.2
AKHUWAT will visit PVTC, TEVTA, SANATZAR and other institutes (Group – A) to
introduce the loaning programme, raise awareness and facilitate access of loans to
graduates of these institutes.
2.3 AKHUWAT will refer those persons who intend to get loans for starting up or expanding
businesses; to the institutes referred in the preceding two clauses (2.1 and 2.2) to acquire
relevant expertise / skills for effective utilization of loans.
2.4 On the basis of actual loans disbursed to the Group - A during 1styear, specific loan
allocation targets for this group will be determined in 2nd year and onwards.
2.5 AKHUWAT shall be responsible for providing the services as specified in Project
Guidelines attached at Annexure - A.
2.6 AKHUWAT shall draw up its overall work plan for first year and submit the same to the
PSIC within two weeks of signing the Service Agreement. The work plan will clearly
specify annual project outputs.
2.7 AKHUWAT shall not enter into any sub-Agreement / Contract with any other
Organization in connection with the operations under this Service Agreement without
the prior written approval of PSIC Board.
2.8 AKHUWAT shall be responsible to assure the security of loan.
2.9 AKHUWAT shall provide subsequent annual work plans to PSIC at least one month
before its effectiveness.
2.10 The complete documentation of loan and borrowers details (name, age, CNIC number,
address, type of business, amount of interest free loan, recent photograph etc.) will be
done by AKHUWAT as per its practices and loan shall be disbursed preferably through
Bank Account. All documentation will be made available to PSIC as and when required.
2.11 The project shall endeavour to serve the enterprising and skilled needy persons
throughout the province of Punjab.
2.12 AKHUWAT will be responsible to recover the loan amount according to its practices
and loaning procedures. It may take additional guarantees like post-dated cheques etc. if
needed.
2.13 AKHUWAT will maintain its accounts as per International Accounting Standards as
applicable in Pakistan.
2.14 AKHUWAT shall be responsible to have its accounts audited by an internationally
recognized, well reputed Chartered Accountant Firm.
2.15 AKHUWAT will submit monthly progress report to the Project Coordination Committee
(PCC) and quarterly reports to the PSIC Board & Implementation & Oversight
Committee (I&OC).
2.16 AKHUWAT will maintain two (2) separate bank accounts; one for disbursement of the
loan and second for deposit of recovery of loan instalments.
2.17 AKHUWAT will reconcile recovery and disbursement accounts with bank and
designated Chartered Accountant firm; selected by PSIC Board, on monthly basis.
2.18 AKHUWAT will develop and deploy Management Information System (MIS) within the
financial year.
2.19 AKHUWAT shall be responsible to deposit the recovered amount from the loanees
against due recovery into main recovery account on monthly basis and the same shall be
remitted to PSIC at the end of the project.
2.20 The mark-up earned from the bank deposits of Disbursement and Recovery accounts will
be remitted to PSIC to be used for other administrative expenses related to the project.
2.21 AKHUWAT will commence its operation from its existing 34 districts including 2 more
districts by the end of 1st year of the project.
2.22 PSIC and AKHUWAT shall open their respective project accounts in same bank for
efficient transfer/ receipt of funds.
2.23 Third party monitoring will be conducted as per provisions of para 6 (iv)/n of Annexure
– B.
Article 3: Responsibilities of PSIC
3.1 The total amount for the Service Agreement to be made available to the AKHUWAT
under this agreement shall be PKR 1,000 million for interest free micro lending. This
amount however does not include service charges.
3.2 The PSIC shall make available to the AKHUWAT funds to be released by Finance
Department, Government of Punjab as per para 6/n to para 9/n of Annexure - B.
3.3 The PSIC shall extend all reasonable co-operation and assistance to the AKHUWAT for
successful discharge of its obligations as defined in Service Agreement.
3.4 The recovered amount from the borrowers will be revolved and utilized for new lending.
The AKHUWAT will be entitled to receive 7% Service Charges on the additional
revolved amount as well as per para 6 (iii)/n of Annexure - B. AKHUWAT in addition to
annual work plans to be submitted to PSIC as per clause 2.6 & 2.9, will provide quarterly
work / disbursement plan at least 15 days before the start of a quarter or upon the
accomplishment of conditions as per clause 3.2 whichever comes earlier, through which
request for the service charges @ 7% of the disbursed amounts of loans through revolved
funds will be generated.
3.5 The loan parameters are:
a) Total loan portfolio of PKR 1,000 million as indicated in the budget of 2013-
14 of the Government of the Punjab.
b) Interest free loan size: upto PKR 50,000/- only
c) Repayment period from borrowers: upto 3 years
d) Mode of repayment of interest free loan: on monthly basis
e) Interest rate to be charged from borrowers: 0%
f) Loan application fee: upto PKR 200 to be charged by AKHUWAT
g) Contributory fund for the payment of loan in case of death of borrower: @ 1%
of loan amount and it will be paid by borrower.
h) Bad debts provision: @ 3% of the total loan portfolio to be picked up by
Government of the Punjab.
Article 4: Duration of Service Agreement
4.1 This Service Agreement will become effective on the date of signing of the agreement.
4.2 This Service Agreement shall remain valid for five (5) years from the date of its signing
unless otherwise modified, altered, amended or terminated at any time by mutual consent
of the parties in writing.
4.3 In case of termination with consent of the AKHUWAT, the funds readily available with
AKHUWAT in its bank accounts relating to the amounts provided under this Service
Agreement will be transferred within thirty days of the termination in writing, to the
PSIC after settling the service charges.
4.4 For the remaining amounts due to PSIC under this Service Agreement after payment of
amounts under clause 4.3, the list of outstanding portfolio of loans disbursed out of the
Agreement amount will be shared with PSIC along with the repayment schedules of the
disbursed loans. All repayments of the remaining Agreement amount to the PSIC will be
made in accordance with the repayment schedules on monthly basis.
4.5 In case of loan default, list of defaulted borrowers along with their particulars including
names, CNIC, addresses, loan amounts, recovery schedules, photograph etc. will be
provided to PSIC.
4.6 In case of termination of Service Agreement with the consent of AKHUWAT, all
receivable Service Charges will be paid by PSIC to AKHUWAT.
4.7 In the eventuality of pre-mature closure of the scheme by the PSIC, payment of dues to
AKHUWAT may be made on the basis of actual expenditure incurred by the
AKHUWAT, up to the maximum of 7% of the amount disbursed during the year. The
actual expenditure would be decided by PSIC and Administrative Department in
consultation with the AKHUWAT.
Article 5: Other Relevant Conditions
5.1 All changes in the Service Agreement must be agreed between PSIC Board and
AKHUWAT and issued by PSIC Board in writing.
5.2 In case of dispute, the parties shall endeavour to settle the dispute through negotiations.
If the parties fail to settle the dispute within fifteen days from the commencement of
negotiations, any party may take the dispute to arbitration. Both the parties will nominate
their arbitrators (one each) and Chief Secretary Govt. of the Punjab shall act as Umpire.
If the arbitrator fails to reach a consensus, the matter shall be referred to the Umpire
whose decision shall be final. The parties undertake to settle their disputes relating to this
service agreement through negotiations and arbitration and shall not resort to litigation
prior to the settlement of dispute through these modes as per the law of the land.
5.3 In case AKHUWAT is obstructed in the commencement or completion of its work by
any Force Majeure (riot, insurrection, war, blockage, civil commotion, epidemics, act of
public authorities, natural calamities, or other abnormal conditions) time for completion
of the project will be extended to accommodate the lost time on account of the Force
Majeure.
5.4 Pro-poor, non-political and non-sectarian dimension of project will be ensured under all
circumstances.
IN WITNESS WHEREOF, the parties hereto have subscribed their names and put their
signatures on the date, day as first mentioned.
Signature:_____________________________
Managing Director
Punjab Small Industries Corporation (PSIC)
Ground Floor, Al-falah Building, The Mall,
Lahore
Party of the First Part
Signature: _____________________________
Dr. Amjad Saqib,
Executive Director, AKHUWAT
House No. 19, Civic Centre,
Near Minhaj ul Quran University,
Sector A-2, Township,
Lahore
CNIC # _____________________________
Party of the Second Part
Witness 1)
Signature: _____________________________
Secretary, IC&I Department,
Government of the Punjab.
Witness 1)
Signature: _____________________________
Hassan Qadeer
Programme In-charge, Akhuwat
Witness 2)
Signature: _____________________________
Additional Finance Secretary (Economic
Services),
Finance Department,
Government of the Punjab
CNIC # _____________________________
Witness 2)
Signature: _____________________________
Muhammad Farooq
Finance Manager, Akhuwat
CNIC # _____________________________
