Target total govt control | The Daily Star
12:00 AM, June 18, 2013 / LAST MODIFIED: 02:36 AM, June 18, 2013

Future Of Grameen Bank

Target total govt control

Commission's recommendations to be disclosed at a July 2 workshop

Grameen Bank Inquiry Commission is set to recommend restructuring Grameen Bank in the shape of Bangladesh Shilpa Bank or Rural Electrification Board in order to give the government absolute control over the micro-lender.
The recommendations will be unveiled at a workshop "Future Structure of Grameen Bank: Some Options" at the Biam auditorium in the capital on July 2. Finance Minister AMA Muhith will give the keynote speech there.
The government-sponsored commission has already sent invitations to a number of experts to attend the event, said sources.
Nobel laureate Prof Muhammad Yunus, the founder of Grameen Bank, termed the commission's suggestions completely irrelevant and unworkable.
“The government takeover of a sound financial institution owned by 8.4 million poor women will be a case of an extreme abuse of government power. Options offered by the Inquiry Commission are totally irrelevant and unworkable. They do not deserve to be discussed with any seriousness,” he said.
According to the paper to be presented at the workshop, the Grameen Bank's legal structure should be similar to that of Bangladesh Shilpa Bank (BSB).
"In order to keep the Grameen Bank base of at least 540,000 shareholders under a single state institution, it would be necessary to amend the Grameen Bank Ordinance to bring it closer to the legal format of BSB," it said.
The Daily Star has obtained a copy of the commission's working paper.
In such case, the paper said the government would hold a majority share, not less than 51 percent and the rest will be available for public subscription by Grameen Bank borrowers.
The composition of the board of directors will be designed to ensure that the government maintains a majority under all circumstances, said the paper.
The government now owns 3.29 percent of the bank based on equity, while the rest 96.71 percent shares are held by the bank's members.
The total number of bank's borrower members is 8.4 million, and more than 5 million of them own shares of the bank.
The commission has also thought of another option of restructuring Grameen Bank in the shape of Rural Electrification Board that supplies power to rural areas.
According to that structure, at least 19 independently registered organisations will be created under Grameen Bank in order to decentralise drastically the bank's operations and management.
These separate units will have no legal, management or financial connection with each other. The electoral process will be more direct and cater to local objectives, said the paper.
The commission will recommend that the Grameen Bank headquarters assume the role of regulator. It will be legally empowered to register its every independent field organisation.
The bank will oversee the electoral process of the independent field organisations; keep an eye on their financial health; ensure uniformity in management, recruitment rules, and on other matters such as, coordinating with national and international bodies. The financial    needs of Grameen Bank   can be worked out within these parameters, said the paper.
In order to turn Grameen Bank into anything resembling a “private” financial institution other than a cooperative or a credit union, it would have to be registered as such under the Companies Act 1994, it said.
"In this case, the most intractable problems would be conducting the Annual General Meeting of all shareholders, which is an essential feature of all private companies and strictly mandated by the Companies Act, 1994," the paper said.
Prof Yunus is opposed to the government claim that it is a statutory organisation, saying it is a private bank.
His secretariat, Yunus Centre that promotes the ideas and works of Prof Yunus, questioned the need for restructuring an institution, which is one of the most efficiently-run organisations in the country.
The centre said, "The commission has not explained why an institution attracting global  admiration needed a total redesigning of its structure."
"It is run by its own law. Its law gives all the powers to the board. 97 percent of its shares are owned by the borrowers. 75 percent of the board members are represented by the borrowers. It does not take any money from the government or any donors for its operation. It earns profit every year."
"So, why disrupt a system which works," asked the centre.
Akbar Ali Khan, former chairman of Grameen Bank, reacted angrily to the commission's suggestions.
"The commission must specify the problems Grameen Bank is suffering from. And what are the problems the commission is trying to solve? You can only talk about solutions after you identify the problems," said Akbar, also former adviser to a caretaker government.
The government formed the commission last year to review the activities of Grameen Bank and 48 other organisations that bear the Grameen name, and make recommendations on how to run the organisations.

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