Cabinet endorses draft bill
The cabinet on Thursday approved the draft of the Grameen Bank Bill 2013, providing the Bangladesh Bank with the authority to ‘regulate the micro-credit organisation like other financial institutions.’ The draft proposes increasing the authorised capital of the Nobel-winner Grameen Bank to Tk 1,000 crore from Tk 350 crore and the paid-up capital to Tk 300 crore from Tk 50 crore.
‘The Grameen Bank, as per the draft bill, will have to report to the Bangladesh Bank from now on. It now reports to the government in keeping with the existing law,’ the cabinet secretary, Mohammad Musharraf Hossain Bhuiyan, told a press briefing.
The bank and financial institutions division placed the draft, which would replace the Grameen Bank Ordinance 1983, at the weekly cabinet meeting which the prime minister, Sheikh Hasina, presided over.
The central bank could not regulate the operation of the micro-credit pioneer under the existing ordinance, according to finance ministry officials.
The proposed amendment, according to the cabinet secretary, would uphold the role of the central bank in regulating the specialised bank. ‘Generally it is positive to extend the regulatory authority of the central bank over financial institutions,’ he observed.
The government initiated the move to change the law reportedly to establish its control over the bank after the removal of Nobel laureate Mohammad Yunus as the Grameen Bank managing director on March 2, 2011. The central back sacked Yunus when he was 71 on the grounds that he was past the retirement age of 60.
The Supreme Court later declared the holding of the post of the managing director by Yunus illegal after he had exceeded the age of 60.
The new law after enactment will allow the central bank to take action against the micro-credit entity, officials said.
Musharraf said that the new law would be in Bangla and replace the ‘martial law ordinance’ of 1983 as all such ordinances and orders proclaimed during the military rule had been declared illegal by the High Court.
The proposed law sets a three-year term for each director as the ordinance does not mention any specific tenure for a director on the Grameen Bank board.
The punishment for an illegal use of the name of the Grameen Bank has been increased to one year’s imprisonment and Tk 1 lakh in fine from six months’ imprisonment and Tk 1,000 in fine. One will need to face a year jail along with a fine of Tk 10,000 instead of one year in jail and Tk 2,000 in fine for providing false information to get micro-credit or other benefits, according to the draft.
The Grameen Bank would continue to enjoy ‘income tax exemption’ and the government’s share would remain 25 per cent, the cabinet secretary said in reply to a question.
The new law would curtail the power of the Grameen Bank’s board of directors by scrapping the latter’s power to prepare rules to regulate the bank on its own, finance ministry officials said.
The finance minister, Abul Maal Abdul Muhith, on Monday said that the main feature of the proposed law was the rules for the election of the directors of the Grameen Bank. ‘There are no election rules for the directors at present… Mohammad Yunus selected the directors on his own,’ he said.
The cabinet on September 9 ordered legal action against the Grameen Bank’s founding managing director Yunus for his alleged income tax evasion as a ‘wage earner’ from 2004 to 2011.
The origin of the Grameen Bank can be traced back to 1976 when Yunus launched a research project to examine the possibility of designing a credit delivery system, without taking any collateral, targeting the rural poor, especially women. In October 1983, the Grameen Bank Project was transformed into a specialised bank by government legislation.
-With New Age input
