The microfinance institution coming under govt regulation

The cabinet Thursday approved in principle the draft Grameen Bank Act 2013 with a provision of bringing the microfinance institution under the regulatory framework of the central bank for its “better performance”.

At a media briefing after the meeting, Cabinet Secretary Mosharraf Hossain Bhuiyan said the central bank will supervise the activities of Grameen Bank from now on.

The bank of the poor will also have to report to the central bank, Bangladesh Bank, he added about the change that came following removal of Nobel laureate Prof Muhammad Yunus as its chief. 

In the proposed law, the unapproved capital of Grameen Bank has been increased from Tk 350 crore to Tk 1,000 crore. Even, the paid-up capital now stands at Tk 300 crore, up from earlier Tk 50 crore only.

Replying to a media query, Bhuiyan said no provision is given in the bill regarding the appointment of Managing Director of Grameen Bank, but the term of the directors has been fixed at three years.

GB’s financial operations will be supervised by the central bank. As the central bank, Bangladesh Bank can supervise every bank and financial institution. So, it can play the role of a supervisor of Grameen Bank, he observed.
“The government keeps a close watch on the bank so that none can make the misuse of power, utilising its name,” Bhuiyan mentioned.

“Grameen Bank was founded in 1983 through an ordinance. It has been given a full-fledged legal frame through this proposed law. The amendments, brought after issuing the ordinance, have been enclosed with it.”
As per draft of the new law in the making, a managing board will be in charge of the functioning and supervisory activities of the bank.

The 12-member board will take three representatives from the government and nine from its shareholders and credit holders.

Bank’s managing director will also be a member of the board but he will have no voting right.
The government will employ one of the board members as the chairman of the board.

If the chairman’s post goes vacant for any reason, the post will be filled with any director excepting the managing director.