Grameen Bank to be controlled directly

The government is finally bringing the Grameen Bank under direct control of the central bank, to give the authorities more powers over the microcredit organisation.The decision is in line with the proposals of the government-sponsored Grameen Bank Commission, which recommended bringing the bank under the regulatory control of either the Bangladesh Bank or the Microcredit Regulatory Authority to better monitor its activities.“It [Grameen Bank] will come under the jurisdiction of the Bangladesh Bank,” Finance Minister AMA Muhith said yesterday.The minister said the central bank would see how it could regulate the bank under the Banking Companies Act.The microcredit bank is being run by Grameen Bank Ordinance 1983 since its inception three decades ago and it does not directly fall under the jurisdiction of the Banking Companies Act.Still, the central bank enjoys some jurisdiction over the bank.Under the existing rules, Grameen Bank has to take approval from the central bank before appointing its managing director, send statements to the banking regulator regularly and take permission before opening new branches, said Mohammad Shahjahan, acting managing director of Grameen Bank.The central bank also regularly inspects the Grameen Bank.“We also send statistical information to the central bank whenever instructed,” he said yesterday, adding that the government could impose some articles of the Banking Companies Act on Grameen Bank if necessary.Speaking to journalists at the secretariat, Muhith said the Commission would submit its final report on Grameen Bank and its associate organisations at the end of this month.He said a new law would replace the Ordinance. “I do not think there will be so many changes in the law.”But he added the government was not bringing any major changes in Grameen Bank’s structure. The ownership structure would remain the same with the borrower-shareholders owning 75 percent and the government the remaining 25 percent.The number of government-appointed directors in the 12-member board would also remain three as it is now.According to him, the appointment of a permanent managing director for the bank was of utmost importance now.Muhith has also said the government is taking steps to have the High Court petition, which has stalled the process of appointing the managing director, withdrawn so that it can appoint the next chief executive.“Once the injunction is withdrawn, we will appoint the MD.“There is no regular managing director at the Grameen Bank. The main reason [behind the delay] is Prof Yunus, because he wants one of his own people as MD.”The finance minister added the current chairman of the bank, although very unwell, would continue until a successor was chosen.