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Govt fortifies its hold over Grameen Bank

OLYMPUS DIGITAL CAMERAThe government yesterday (27 October 2013) took a stride towards gaining a stranglehold on Grameen Bank after Finance Minister AMA Muhith placed a bill in the parliament.
The new Grameen Bank Bill stipulates that the microcredit organisation takes policy-related decisions in consultation with the government. It also authorises the government to make rules for any aspect of the running of the bank.
The government originally had these authorities in the Grameen Bank Ordinance, 1983 but it relinquished them in 1990 through an amendment. At present, the government only have the power to make rules for election of the borrower-directors.
Furthermore, in the bill placed yesterday the government added a provision which allows it to take steps to remove barriers to implementation of the new law. However, the draft of the bill approved by the cabinet on October 3 had the central bank enjoying the power.
“The objective of the law is to expand the services of the Grameen Bank to the larger group of people in rural areas keeping the ownership of the government and state-owned agencies intact. The move will also help loan recipients to become the bank’s shareholders,??? Muhith said while placing the bill in the parliament.
The existing ordinance said that every director shall be indemnified against all losses and expenses incurred by him in discharge of his duties except such as are caused by his own wilful act or default. The draft bill abolished this provision.
The government has also brought in changes in some other areas to give the central bank more control over Grameen Bank. Take, for instance, the obligation to send returns and financial reports to the government under existing rules. The proposed law says the returns be sent to the Bangladesh Bank (BB) and financial statements to both the government and the central bank.
A new clause included in the draft law says that the government will publish through gazette notification the financial statement and also place in the Jatiya Sangsad.
The new act will curtail the power of the Grameen Bank Ordinance that gets around all other laws to give the micro lender tax exemption.
A finance ministry official said when the draft act becomes law Grameen Bank will only enjoy exemption of income tax depending on the government’s will and not other taxes. According to the draft law,   the GB’s zonal manager or an official of equal status will retain the power to file cases under the Public Demands Recovery (PDR) Act. In the existing Ordinance any GB official enjoyed the power.


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