The government yesterday injected Tk132m in the Grameen Bank, increasing its stake to 25% from the previous 3.01%, in an apparent move to tighten its hold on the Nobel-winning micro-lender.
“We have injected Tk132m to raise the government stake in the bank by 21.99% as the GB Ordinance 1983 allows the government to hold up to 25%. The fund was allocated in the outgoing fiscal,” said a senior financial institution’s division official, requesting anonymity.
He added that the step follows recommendation of the Grameen Bank Commission which was formed last year and was tasked with identifying institutional strengths, weaknesses and constraints of the bank while recommending measures for good governance, accountability of management and transparency in its operations. It has advised for hiking government stake to 51% and splitting the bank into multiple bodies.
The paid up capital of the micro-lender was raised from Tk520m to Tk597.9m five years back but the government has not raised its stake since then, the official said. The remaining share was held by members of Grameen Bank.
The government plans to buy another 26% of Grameen Bank to reach the target set by the commission by injecting another Tk156m into the bank from allocations kept for the purpose in the budget for the upcoming fiscal, the bureaucrat said.
Finance Minister AMA Muhith declared earlier the government has plans to raise the paid-up capital of the micro-lender. “The paid-up capital of Grameen Bank is very low and has not been increased in recent times.”
In a recent meeting of the commission, he has directed officials to inject the government’s unpaid part of the paid-up capital, according to sources.
However, Dr Salehuddin Ahmed, who was the central bank’s governor for four years until May 2009, pointed out that Grameen Bank is a legal entity, not a government institution and the government can raise the share only if the bank’s board allows. “You cannot call it a government institution. It was set up by the government under a special act.”
When the bank was established in 1983 with a paid up capital (equity) of Tk30m, the government’s share in it was Tk18m or 60 percent. Borrowers of the bank owned the remaining 40 percent, half of which belonged to female borrowers, according to the Grameen Bank Ordinance 1983.
The government in an amendment in 1986 raised the paid up capital to Tk72m without subscribing proportionately to its ownership, reducing its stake to 25 percent. The rest belonged to the borrowers of the bank.
Over the years, the bank has increased its paid up capital that went up to over Tk520m at the end of 2009 from Tk358m of the previous year.
The bank’s paid up capital was Tk318m in 2007 and Tk269.5m in 2000.