Govt to take back control of the microlender

The new Grameen Bank Act will give back the government the control it had relinquished to the microcredit bank two decades ago.
The new law says the government, through official gazettes, will be able to make rules in order to achieve the act's objectives.
According to existing rules, the government has power only to make rules for electing nine Grameen Bank directors from the bank's borrowers.
A Grameen Bank official said the government had given up all powers, except for making rules for electing the nine directors, in 1990 when amendments were made to the Grameen Bank Ordinance, 1983.
The new act will establish government control over the bank, as it allows the government to make rules not only for election of the borrower directors but also in other areas, said the official, asking not to be named.
The cabinet approved the draft act on October 3. It has been sent to the law ministry for vetting before it is placed in parliament for passage.
The act contains 39 provisions, against 38 of the GB ordinance, as the government added a new provision allowing Bangladesh Bank to take steps to remove barriers to implementing the new law.
The government has also brought in changes in some other areas, giving the central bank more control over Grameen Bank.
Bangladesh Bank has been given some responsibility concerning the microlender so that it doesn't suffer in the absence of its founder Prof Muhammad Yunus, said a senior official of the Banking Division.
Experts, however, have opposed the changes.
Akbar Ali Khan, former chairman of Grameen Bank, said if any law concerning Grameen Bank is to be made, it should be done in consultation with the bank's borrowers, who own 75 percent of its shares.
The nine elected directors, who represent the bank's 84 lakh borrower members in the board, and its more than 26,000 employees vehemently oppose the proposed changes to the ordinance.
Under existing rules, Grameen Bank is obliged to send returns, reports and statements to the government. But the new law says those documents have to be sent to the central bank as well.
In line with the ordinance, the microlender sends statements of audited accounts to the government within three months after the end of a financial year. But the new act makes it mandatory for Grameen Bank to send the statements to Bangladesh Bank.
The new act will curtail the power of the Grameen Bank Ordinance that gets around all other laws to give the microlender tax exemption, said the Grameen Bank official.
The bank will have to depend on the government to get tax exemption, as the issue will be decided in line with the Income Tax Act 1984, said the official.
Grameen Bank has always enjoyed tax exemption since its inception in 1983 through a regular extension of the privilege by the National Board of Revenue. The microlender's tax exemption privilege has recently been extended up to 2015.
The new act retains the board's power to make regulations without the need for government's permission.
It also says the bank's managing director has to be below 60 years whereas no mention of such age limit was made in the ordinance.
Following a court order, the government is turning into law the GB ordinance, along with more than 500 ordinances promulgated during the military rule between 1982 and 1986.
Meanwhile, the finance ministry has sent the draft of the Grameen Bank (Election of Directors) Rules, 2013 to the law ministry for vetting.
The draft says Bangladesh Bank will appoint a three-member commission to oversee the election of the nine directors.
The commission will be comprised of a Grameen Bank representative nominated by its chairman, and a representative each from Bangladesh Bank and Microcredit Regulatory Authority. The BB representative will act as the chief election commissioner.
Under existing rules, the Grameen Bank board appoints one of its officials as the election commissioner, and the bank's officials serve as returning officers.
According to draft rules, the commission will appoint central bank officials as returning officers, while officials from scheduled banks will act as assistant returning officials.
The election commission will be given power to instantly suspend and initiate departmental action against officials if they refuse to act on its instructions, says the draft.