Bangladesh is placing Grameen Bank, which pioneered small loans for the poor, under closer scrutiny by the country’s central bank.
The Cabinet of Prime Minister Sheikh Hasina on Thursday approved the draft of a law to regulate Grameen. The law must also be approved by parliament.
Garmeen was a trail blazer in extending small loans to the poor as a way of overcoming poverty, earning it and founder Muhammad Yunus the 2006 Nobel Peace Prize. It has about 9 million borrowers, mostly women. But Yunus and the government had been at odds for several years over the running of the bank.
A government-appointed investigation found that Grameen Bank violated its charter as a microlender by creating affiliates that did not benefit the bank’s shareholders. Yunus was ousted as managing director in 2011 after the High Court ruled the 73-year-old 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.
Cabinet Secretary Musharraf Hossain Bhuiyan said the new law would ensure transparency at the bank.
It would give Bangladesh Bank broad powers over Grameen that are similar to its authority over regular banks, which is aimed at ensuring that lenders operate in accordance with the law and don’t take excessive financial risks. Currently, Grameen has a special status under its 1983 founding ordinance.
The law permits Grameen to increase its capital and restricts the tenure of the bank’s directors to three years from the current indefinite period.
The government will have 25 percent of the bank’s shares while 75 percent would be owned by borrowers as before.
Yunus has had frosty relations with Hasina, the Bangladeshi prime minister, and his supporters say the charges of breaching laws against him are politically motivated.
Last month, the government accused Yunus of evading tax on overseas income, including from book royalties, speeches at conferences and numerous awards. Yunus says he has always acted lawfully.
Source: ABC News