The Bangladesh government said it won’t take control of microlender Grameen Bank, unexpectedly going against a government commission that recommended it raise its stake in the company.
Finance Minister Abul Maal Abdul Muhit announced on Wednesday that the government wouldn’t increase its stake in the bank to 51% from the existing 25%. The Wall Street Journal reported Tuesday that the commission’s final decision was due any day and the government was expected to follow its recommendation. A preliminary commission report had recommended taking a controlling stake.
“The government has no intention of changing the ownership or management style of the bank,” Mr. Muhit said on television when asked about a plan to increase the government’s equity in Grameen Bank, which has drawn praise for bringing credit to millions of rural customers.
The government pumped 132 million taka ($1.7 million) into the bank in June to raise its share in the lender to 25% from 3%. The majority of the shares are held by the bank’s members, mostly women borrowers.
A government-appointed commission had earlier recommended in a preliminary report that the government increase its share in the pioneering microfinance bank to take a controlling stake, diluting existing shareholders. The plan ran into heavy opposition, and the announcement of a final set of measures, due to be unveiled in July, had been postponed several times.
Mr. Muhit said, however, that the government did plan to change the rules governing the election of directors to Grameen’s board. Grameen Bank is run by a 13-member board, nine of whom are elected representatives of Grameen’s 8.4 million rural borrowers.
Although the finance minister didn’t reveal details of the proposed changes, the Grameen Bank commission has said the government plans to look into the women’s “qualifications” to serve as directors. Critics have accused the government of harassment.
“I find it outrageous that people are calling into question the qualifications of these women who have become owners of the bank with their own money and through their hard work,” Muhammad Yunus, the bank’s Nobel Prize-winning founder, said in an interview.
The government removed Mr. Yunus as managing director of Grameen Bank in 2011, saying he had passed retirement age, even though the board of directors had passed a resolution asking him to continue. Since then, the government has struggled to appoint a chief executive of its choice, mainly due to opposition from the board.
Critics fear the government is taking control out of the hands of the Grameen members who now elect their representatives to the board of directors. The commission’s plan for elections controlled by the government could end the independence of the bank.
Grameen remains Bangladesh’s best-known success story, and all the talk of restructuring is only adding to tensions in the country as it struggles to rebuild its image after the Rana Plaza garment factory disaster in which 1,100 people died.
“We will never allow the government to grab our bank in the name of changing laws,” said Saleha Begum, an elected member of the board of directors. “If the government wants to change some rule, there has to be a reason for it. The government must consult us.”
Source: wsj
