Reversal News Desk ,
The ownership structure and board of Nobel-winning microfinance institution Grameen Bank are set to undergo major changes. The government’s stake in the institution is planned to be reduced from 25 percent to 5 percent.
The draft of the new ordinance, published on the website of the Finance Ministry’s Financial Institutions Division, outlines the plan. The ordinance also seeks to amend the Grameen Bank Act of 2013.
The draft states that under the Grameen Bank Ordinance 1983, the government owns 25 percent of Grameen Bank and the remaining 75 percent is owned by borrowers. However, the proposed amendment plans to transfer 95 percent of the bank’s shares to borrowers.
According to the new draft, the bank’s paid-up capital will be set at Tk 3 billion. Borrowers will gradually increase their capital contributions to acquire 95 percent ownership. Any dividends declared by the board will be distributed proportionally based on the capital.
The proposed amendment calls for reducing the number of government-appointed directors from three to one and abolishing the government’s role in appointing the bank’s chairman.
The draft states that the borrowers will have the opportunity to elect 11 directors to the board in the new proposal, and that if the chairman is incapacitated, the board members can authorize any other director to perform the duties as acting chairman. This will strengthen the autonomy of the institution.
The current law does not mention Dr. Yunus’s microfinance activities in Jobra village with the establishment of Grameen Bank. However, the draft ordinance has included it by adding an explanation to Section 4 of the law. The new explanation states that the Grameen Bank project refers to the microfinance activities conducted in Jobra village of Hathazari upazila of Chittagong under the Economics Department of Chittagong University in 1976. This project was later approved by Bangladesh Bank and other banks including Bangladesh Krishi Bank participated in it.
In addition, the term of the managing director can be extended up to a maximum of 65 years based on the approval of the board, if it is deemed necessary for the activities of the bank. In addition, the elected directors will remain in their positions until the newly elected directors assume their duties.
During the 15-year rule of Sheikh Hasina’s government, there has been much discussion and criticism about Grameen Bank. Sheikh Hasina was forced to resign in the face of a mass uprising on August 5 last year.
Professor Muhammad Yunus, the chief advisor to the interim government of Bangladesh, founded Grameen Bank. However, he resigned from the post of managing director of Grameen Bank in 2011. The Awami League government forced him to resign on the grounds that he had passed the retirement age.
