Department of Rural Development 04/2016

Circular No: 04/2016

Reference: NP/19/11/Dept/Cir
Date: 16.05.2016

To: All District Rural Development Officers and Divisional Rural Development Officers

Subject: Fund Disbursement from Village Rehabilitation Societies and Women's Rural Development Societies

Introduction

Government funds have been provided to Village Rehabilitation Societies and Women's Rural Development Societies registered under the Department of Rural Development, Northern Province, through Government and Non-Governmental Organizations with the noble objective of improving their livelihoods. Through the activities of these societies, income-generating projects and associated programs have been implemented, and these funds have significantly grown. The Department has observed that in the past, these funds have been largely stagnant, deviating from their intended purpose, and have been frozen in many instances.

Background

Following discussions conducted in this regard with the Honorable Governor of the Northern Province and the Secretary to the Governor, steps have been taken to bring this matter under control as per the instructions given by the Honorable Governor. All Village Rehabilitation Societies and Women's Rural Development Societies registered under the Department of Rural Development, Northern Province, are subject to audit, and based on audit observations, financial activities are being regulated. Accordingly, from the coming year, a common accounting system has been implemented for all these societies registered under the Department of Rural Development. This will facilitate proper auditing.

Decisions from Discussions

Based on the above, it was decided in the discussions that fund disbursements from society bank accounts for their activities should be carried out according to the following points, and a common procedure for fund disbursement should be ensured to be followed.

3.1 Approval Limits

Permission to disburse up to Rs. 1000.00 (Rupees One Thousand only) from a society's funds is granted to Rural Development Officers. For disbursement of amounts exceeding this, the permission of the Director must be obtained.

3.2 Revolving Micro-Credit Funds

Revolving micro-credit funds shall not be disbursed for any activities other than their intended purpose. These funds are specifically designated for micro-credit operations and must be maintained separately for that objective.

3.3 Contribution to Village Development

If a society wishes to contribute to the development of the village in which it is located, society funds may be released only after obtaining the permission of the Director, with appropriate justification and recommendation from the Divisional Secretary and Rural Development Officer. Such contributions must be clearly linked to community development priorities.

3.4 Use for Society's Own Development

If a society wishes to use society funds for its own development, funds may be released only after obtaining the permission of the Director, with appropriate justification and recommendation from the Divisional Secretary and Rural Development Officer. This includes investments in infrastructure, equipment, or capacity building for the society itself.

3.5 Viable Livelihood Activities

For viable livelihood activities determined by the society to be implemented for increasing the society's income, funds may be released only after obtaining the permission of the Director, with appropriate justification and recommendation from the Divisional Secretary and Rural Development Officer. Such activities should demonstrate potential for sustainable income generation.

3.6 Procedure for Fund Release

If funds are to be disbursed from the society's funds for the activities mentioned above (3.3, 3.4, and 3.5), details must be clarified to all society members paying subscriptions through a special general meeting. The request for fund disbursement, along with the meeting report and recommendation from the Divisional Secretary and Rural Development Officer, shall be submitted through the District Officer to the Director for approval. This ensures transparency and member participation in financial decisions.

3.7 No Approval for Other Government Department Events

Society funds shall not be approved for release for events connected with other government departments being conducted in the division. Societies should not be used as funding sources for activities outside their mandate.

3.8 No Approval for Other Unrelated Community Events

Society funds shall not be approved for release for other non-development community events occurring in the division or village. The funds are intended for development purposes, not for general social event funding.

3.9 Compliance Required

Financial activities of the society must be conducted in accordance with the procedures mentioned above. I bring to your attention that no one has been authorized to take any action contrary to these procedures. However, decisions may be taken in exceptional circumstances based on prevailing conditions in the future.

3.10 Implementation Instructions

I request you to notify and guide the office bearers of Village and Women's Rural Development Societies about the contents of this circular and implement it with their cooperation to achieve the proper objective.

3.11 Effective Date

The provisions mentioned in this circular come into effect from 16.05.2016.

Summary of Key Provisions

Procedure for Special Approvals (Sections 3.3, 3.4, 3.5)

1. Convene special general meeting of all subscription-paying members
2. Clearly explain proposed activity and fund utilization
3. Obtain meeting approval and prepare meeting report
4. Submit request with:
   • Meeting report
   • Justification for fund use
   • Recommendation from Divisional Secretary
   • Recommendation from Rural Development Officer
5. Forward through District Rural Development Officer to Director
6. Obtain written approval before any disbursement

Prohibited Uses of Society Funds

• Events conducted by other government departments
• Non-development community events
• Personal loans or benefits (outside micro-credit schemes)
• Any purpose without proper approval
• Revolving micro-credit funds for non-credit purposes

Rationale for Guidelines

These guidelines aim to:

• Prevent stagnation and freezing of society funds
• Ensure funds are used for intended development purposes
• Establish transparent procedures for fund utilization
• Empower societies while maintaining accountability
• Align fund usage with audit requirements
• Promote sustainable income generation through societies

Distribution List

1. Private Secretary to the Honorable Minister of Fisheries, Transport, Trade and Commerce, Rural Development, Road Development and Motor Transport, Northern Province – for information.
2. Chief Secretary, Northern Province – for information.
3. Secretary, Ministry of Fisheries, Transport, Trade and Commerce, Rural Development, Road Development and Motor Transport, Northern Province – for information.
4. District Secretary (Government Agent) – for information.
5. Assistant Auditor General, Northern Province – for information.
6. Chief Internal Auditor, Northern Province – for information.
7. Divisional Secretary – for information and necessary action.
8. Divisional Federation of Rural Development Societies – for information and implementation.

S. Srijeyanthan
Director
Department of Rural Development
Northern Province