Grameen Bank – Government Control on the Rise

On August 2, the Cabinet approved a proposal that amends the Grameen Bank Ordinance 1983, which reduces the power of the bank’s board and instead gives more authority to the chairman for picking the managing director of the microfinance institution. In the amendment, the government-appointed chairman of the bank, in consultation with the board, will prepare a three-member panel for the Bangladesh Bank’s consideration in appointing the managing director.

Of Grameen Bank’s 8.3 million borrowers, 97% are women. These women currently own 96% of the shares of Grameen Bank and control 9 of the 13 board seats.  If the government of Bangladesh were to grab control of the Bank away from the women people fear that this could lead to a tragic setback for women’s empowerment.

Reactions to the amendment

58 women leaders and professionals in the country condemned the government move to amend the Grameen Bank Ordinance, saying it would deprive its real owners of their role in managing their bank. They claim the government’s proposed amendment has the effect of allowing the chairman to take undemocratic decisions, overriding the views of the majority of the board who are the women representing its borrowers.

Muhammad Yunus, founder and ex-managing director of the bank has always feared the possibility of the government taking over the bank. His comment on the latest developments is “Now my apprehension has started to become a reality.  I am so disheartened that I am unable to express my feeling”.

The Daily Star supports Yunus’ fears. They write “It does become clear as daylight that the singular purpose of the amendment is to transform the character of the bank’s uniqueness and originality. We believe this move is to empower the Chairman over the Board with regard to appointment of the MD.” The fear of a takeover is also shared by other supporters. More than 1,000 people from 70 countries have already signed a petition to help protect the independence of Grameen Bank and its women borrowers. In addition, 21 microfinance institutions (MFIs) and international organizations have officially endorsed this petition to defend the rights of the women borrowers of Grameen Bank. Among them are Cashpor Micro Credit (India), Entrepreneurs Savings & Credit Cooperative Society Ltd. (Bangladesh), Kashf Foundation (Pakistan), FONDEP MC (Morocco), Cooperativa de Ahorro y Crédito “Padre Vicente Ponce Rubio” Ltda. (Ecuador), FINCA International (USA), and Freedom from Hunger (USA).

More information on the petition and quotes of people that have signed it can be found here >>

Government to inspect Grameen Bank

On Sunday, the Bangladesh Government announced that it will form a commission to look into the activities of 54 organisations associated with Grameen Bank. The Finance Minister Abul Maal Abdul Muhith stated, that out of those 54 organisations associated with the micro-finance institution, only 4 or 5 are actually authorised by the Board of Directors of the bank. As reported by the Daily Star, this means that over 90% of Grameen Bank’s associated organisations and companies are running without approval of the Board of Directors, which is why a recently established commission will probe into the Bank’s affairs and discuss how they could be regulated.

Muhammad Yunus himself, founder of Grameen Bank, was dismissed from the role of Managing Director of the bank last March as he exceeded retirement age. He recently expressed concern that the Government might be trying to take control over Grameen Bank as they are increasingly using the word “Grameen” for their organisations, such as Grameenphone, the country’s largest telecom company. None of these governmental organisations have any relation to microcredit which is why Yunus believes they should remain independent.