Bangladesh brings microlender Grameen Bank under central bank supervision

DHAKA Tue Nov 5, 2013 10:59pm IST

Employees of Grameen Bank walk in front of a portrait of Nobel laurate Muhammad Yunus in Dhaka March 8, 2011. REUTERS/Andrew Biraj/Files

Employees of Grameen Bank walk in front of a portrait of Nobel laurate Muhammad Yunus in Dhaka March 8, 2011.

Credit: Reuters/Andrew Biraj/Files

Related Topics

DHAKA (Reuters) - Bangladesh's parliament approved a law on Tuesday bringing the Nobel prize-winning Grameen Bank under central bank authority, a move founder Mohammad Yunus has said is a ploy to destroy the microfinance lender.

Yunus, 73, was removed as head of the bank in 2011 on the grounds that he had stayed on past the legal retirement age of 60. He was not immediately available for comment.

Yunus, dubbed the "banker to the poor", was awarded the 2006 Nobel Peace Prize jointly with the bank, which has provided about $10 billion in small loans, most of them to women, to fund businesses and help people escape poverty.

Similar programmes have been created in more than 100 nations, from the United States to Uganda.

Lauded abroad then by politicians and financiers, he has been under attack from the government of Prime Minister Sheikh Hasina since 2010 after a Norwegian documentary alleged Grameen Bank was dodging taxes.

Yunus has denied any financial irregularities. His supporters say he is being discredited by the government because of a feud with Hasina dating back to 2007, when he tried to set up a rival political party while Bangladesh was ruled by an interim military government.

"The draft of the act has been approved at the parliament, which now becomes as a law in the current session," said lawmaker AHM Mustafa Kamal, chairman of the standing committee on the finance ministry, which recommended the law be passed.

Kamal, a member of Hasina's ruling Awami League party, told reporters that the central bank and government had a right to know how the Grameen Bank, which was established in 1983 and has 8.3 million borrowers, organises its finances.

"It is not wrong, if the government wants to make the Grameen Bank's activities auditable," he said.

The government holds a 25 percent stake in the pioneering lender.

Finance Minister AMA Muhith tabled the Grameen Bank Bill 2013, which replaces the founding Grameen Bank Ordinance 1983, on October 27. The new law means the central bank can commission an audit of Grameen Bank transactions.

It also gives the government power to appoint a chairman from the three government-nominated directors to the Grameen Bank's management board, who will then organise the appointment of a managing director for the micro-credit bank.

The chosen candidate must be approved by the central bank. Candidates for the full-time post must have knowledge on rural economics, economics or micro-finance and be aged under 60, the new law states.

The law also says the Grameen Bank cannot run any business beyond its mandated area or transact with any business entities.

(Reporting by Serajul Quadir; Editing by Catherine Evans)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Adani Project

Adani Project

Australia approves Adani's $16 bln Carmichael coal project  Full Article 

India-U.S. Talks

India-U.S. Talks

Kerry to woo Modi's India, but quick progress unlikely  Full Article 

Paring Debt

Paring Debt

Jaiprakash to sell hydro plants to Reliance Power  Full Article 

Nifty Falls

Nifty Falls

The broader index hits lowest in nearly a week on profit taking  Full Article 

Mideast Conflict

Mideast Conflict

U.N. Security Council calls for humanitarian ceasefire in Gaza  Full Article 

Market Eye

Market Eye

Foreign investors prefer Indian cyclicals, utilities - Macquarie  Full Article 

Debt Investment

Debt Investment

India's FII debt limit hike credit-positive, says Moody's  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage