The government has decided to establish Palli Sanchay Bank along the lines of Grameen Bank in its latest bid to emulate the success of Nobel laureate Muhammad Yunus.
A draft of Palli Sanchay Bank Act, 2013 has already been prepared by the Rural Development and Cooperatives Division and forwarded to the finance ministry’s banking division to secure approval from the cabinet.
The new bank will emerge from the government’s “One House, One Farm” project, just like Grameen Bank was born in 1983 following the conversion of Chittagong University’s Yunus-led Grameen Bank project.
As per the draft law, the specialised bank will enjoy exemption from value-added and income taxes, like Grameen Bank.
The bank will not be governed under the Banking Companies Act, meaning it would remain mostly out of bounds of the central bank. However, Palli Sanchay Bank’s managing director would be appointed, by the board of directors, with prior permission of Bangladesh Bank.
The bank’s paid-up capital will be Tk 600 crore, 80 percent of which will be provided by the government through its “One House, One Farm” project.
The government will hold 50 percent of the bank’s ownership and the remaining 50 percent would go to the member cooperative societies of the “One House One Farm” project. However, the government will not take any dividends against its shares.
The activities of the specialised bank, in many aspects, would also resemble those of Grameen Bank. Like Grameen Bank, it will collect deposits and lend to its members.
But Palli Sanchay Bank will differ from Grameen Bank in that it would also conduct general banking activities, including various types of foreign exchange related transactions including opening of letters of credit (LC), online banking, introducing debit and credit cards.

The bank’s board of directors will consist of 17 members and the secretary of the Rural Development and Cooperatives Division will be its ex-officio chairman.
Seven directors will be selected from the share holders, with the government appointing one from the civil society. The other positions of the board will be filled up by government officials.
The “One House, One Farm” is a project under the Annual Development Programme, the first phase of which started in 1997. The second phase of the project started after the present government assumed power.