Bangladesh passes bill to tighten control on Grameen Bank

Bangladesh has passed a bill to tighten control on Grameen Bank, triggering a controversy as its founder Nobel laureate Muhammad Yunus said the move would lead to the "ultimate destruction" of the microcredit lender.

PTI| Last Updated: Nov 06, 2013, 19:16 PM IST

Dhaka: Bangladesh has passed a bill to tighten control on Grameen Bank, triggering a controversy as its founder Nobel laureate Muhammad Yunus said the move would lead to the "ultimate destruction" of the microcredit lender.

The bill passed by parliament yesterday tightens the government`s grip on the institution set up by Yunus in 1983 to fight poverty, and brings it under closer control of the central bank.

Yunus, who was ousted in 2011 in what was seen as a politically engineered move, condemned the new law and said it "created the opportunity for the government to take 100 per cent control of the bank".

He said: "With these amendments, the government has opened the door for its ultimate destruction. What a shame for the nation, and the whole world!"

Grameen Bank was created as a "bank owned by poor women, and managed by poor women. Its legal structure did not allow any government interference of any kind, except for regulatory oversight," he said in a statement.

"I feel extremely sorry that the nation has to go through the unnecessary traumatic experience of seeing a great global iconic institution, created by this nation, be brutally harmed by a group of irresponsible and thoughtless people."

The new law elevates the government role in running the microcredit organisation without any increment in its ownership, the Daily Star newspaper reported.

Finance Minister AMA Muhith defended the new law, saying it was a constitutional requirement because the original ordinance that created the bank during military rule must be ratified by parliament.

"The Supreme Court has outlawed all ordinances that were enacted by the military regime," he said.

The new law replaced the Grameen Bank Ordinance but also made some amendments, bringing its finances under close supervision of the central bank and raising its authorised capital level.

The government has progressively moved to control the bank, raising its stake to 25 per cent from around three per cent. The Supreme Court has ruled that Grameen is a state-owned bank no matter what the government`s stake is.

It ordered a commission on the future status of the bank and has launched a tax probe against Yunus, who has been at odds with Prime Minister Sheikh Hasina since 2007 when he made a brief foray into politics.

Yunus was ousted as managing director in 2011 after the High Court ruled he violated retirement laws by serving beyond the age of 60. He has repeatedly accused the government of trying to "destroy" the bank, but authorities deny the allegations.

The 73-year-old economist, who won a Nobel prize in 2006, was branded a "bloodsucker" by Hasina and has recently been the subject of a hate campaign by Islamic clerics.

From now on Grameen must consult the government on any major policy decision. Its 12-member board previously enjoyed broad authority to run Grameen.