Govt officially reduces its ownership in Grameen Bank from 25% to 10%
The ordinance comes after the Advisory Council of the interim government, on 17 April, gave in-principle approval to a proposal to amend the Grameen Bank Ordinance, aiming to reduce the government's stake in the Nobel-winning microcredit institution
The government has officially reduced its ownership in Grameen Bank by lowering its shareholding from 25% to 10% and slimmed down its authority on the board by limiting its director appointments from three, including the chairman, to just one.
The government issued an ordinance by amending the Grameen Bank Act, 2013 in this regard. A gazette notification was published yesterday (12 May) regarding the ordinance.
As per the ordinance, from now on, beneficiaries of the bank will own 90% shares of the bank. Previously, they owned 75% shares.
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The ordinance comes after the Advisory Council of the interim government, on 17 April, gave in-principle approval to a proposal to amend the Grameen Bank Ordinance, aiming to reduce the government's stake in the Nobel-winning microcredit institution.
At a briefing after the Advisory Council meeting that day, Environment Adviser Syeda Rizwana Hasan said the Grameen Bank operated on a value system that gave its beneficiaries a significant voice in its operations.
"But you know, the Nobel laureate chief adviser was politically targeted during the previous government's tenure, and a lot of government control was imposed," she added.
The new ordinance also expands Grameen Bank's operations to assist the destitute and landless at both the union and municipal levels, she added.
A Financial Institution Division official, speaking on condition of anonymity, told The Business Standard on that day that the move aims to restore the government's stake and board representation in the bank to the pre-2011 framework.
"The 1983 Ordinance required a 25% government ownership in Grameen Bank. However, successive governments failed to contribute their share of the paid-up capital, which led the government's stake to fall to about 5%-8%," the official said.
"In 2011, when Muhammad Yunus was removed as managing director, the government increased its capital contribution to regain a 25% stake in the bank," the official further added.
As per the amended Grameen Bank Ordinance, the bank's paid-up share capital has been set at Tk300 crore. Borrower-shareholders will gradually increase their paid-up capital to reach 90% ownership. Any dividends declared by the board will be distributed according to the proportion of paid-up share capital.
Disclaimer: The story has been updated to correct the percentage of reduced government stake at the bank, which was previously mentioned as 5%. We regret the error
