The government-controlled Grameen Bank Commission is clearly considering restructuring Grameen Bank by breaking up the world-famous institution into multiple bodies.
The commission will hold a workshop on “Future structure of Grameen Bank: some options” to seek the opinion of select individuals in the first week of July. Along with an invitation to the workshop, it also circulated a working paper in which it has proposed a change in the legal structure of the bank.
A copy of the working paper collected by the Dhaka Tribune show that the proposals include creating “19 or more independently registered organisations,” and that the government take control of the Nobel winning organisation by taking over 51% of its shares.
Its founder, Nobel Laureate Professor Mohammad Yunus, told the Dhaka Tribune on Monday: “Government takeover of a sound financial institution owned by 8.4m poor women, will be a case of 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.”
The commission suggested in the working paper that it would be necessary to amend the Grameen Bank Ordinance to bring it closer to the legal format of Bangladesh Shilpa Bank. Under the scenario, the government will hold a majority share, not less than 51 %, and the rest will be available for public subscription by Grameen Bank borrowers. The composition of the Board of Directors too, will be designed to ensure that, under all circumstances, the government maintains a majority.
Alternatively, Grameen Bank may be restructured and made similar to the Rural Electrification Board, by creating independently registered organisations. These separate units would have no legal, managerial or financial connection with each other. The electoral process would be more direct and will cater to local objectives.
The “apex body,” ie the existing Grameen Bank Headquarter, will assume the role of the “regulator” and be legally empowered to register each of the independent field organisations. It would oversee the electoral process of the independent field organisations, keep 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 the apex body can be worked out within these parameters.
The commission, according to the working paper, was planning to keep the number of shareholders limited to 540,000, under a single state institution.
Grameen Bank officials said the total number of borrowers from the bank is 8.4m, of whom over 5m own shares.
The commission also said in order to convert Grameen Bank into “anything” resembling a “private” financial institution such as a “cooperative” or “credit union,” it will have to be registered as such under the Companies Act, 1994. In this case, the most intractable problems will be in conducting the Annual General Meeting of all shareholders, which is an essential feature of all private companies and strictly mandated by the Act.
A Yunus Centre official told Dhaka Tribune that the commission “manipulated” some quotes from Prof Yunus in the working paper for their “benefit.”
Finance Minister AMA Muhith will, among others, address the workshop.
However, some Grameen Bank officials have raised questions about the motives of the government in redesigning the structure of the bank. They said the commission has not explained why an institution attracting global admiration needed a total structural redesign when many other institutions have been falling apart due to negligence of the authorities concerned.
“It does not take any money from the government or any donors for its operation. It earns profit every year. Why disrupt a system which works,” a Grameen Bank official said, requesting anonymity.
In March 2011, the central bank relieved Dr Yunus from the position of managing director of Grameen Bank. He challenged the action, which was later upheld by the highest court.