Grameen takeover attempt is stealing from the poor

The working paper proposes three options:

1. To restructure Grameen Bank as a government bank, with 51 per cent or more shares in the bank being held by the government, which would also have the majority of seats on the board of directors.

2. To transform Grameen Bank into 19 or smaller Grameen Banks. Each would be separately registered. There would not be any legal relationship between them. Each would have its own independent management structure. The current Grameen Bank head office will be given the responsibility of becoming the regulatory organisation for this new Grameen Bank family. This apex regulatory organisation will provide registration to each of these small Grameen Banks. This apex body will control and supervise all of the small Grameen Banks. It will coordinate among them at both the national and international level. The small Grameen Banks will cover the costs of running the apex body.

3. Grameen Bank may be transformed into a private company-like organisation, other than a cooperative or credit union. Under this option, the Commission envisages a problem in registering Grameen Bank under the Companies Act – that of holding annual general meetings with the huge number of Grameen Bank borrowers (currently 8.4 million). This annual general meeting is an indispensable requirement of the Companies Act, and there is no way to avoid it.

What is the reason for this rush to change the law?

Grameen Bank is a unique institution created under a unique legal structure. The effectiveness of this structure has been successfully demonstrated over the last 30 years by the organisational efficiency and power of the bank’s operations. What offence has Grameen Bank committed that it must be broken into pieces? Someone has to explain this.

The Grameen Bank Ordinance with amendments up to 2008 is a beautiful legal structure for the fulfillment of the ideals and objectives of the bank. Any change in this structure will be devastating for the bank.

The amendment in 2008 included provisions to open Grameen Bank branches in urban areas and for the election of a Grameen Bank chairman by its own board of directors, rather than be appointed by the government. These provisions stood cancelled as the present government did not ratify them at the start of its term.

The current legal structure has led Grameen Bank to the peak of global recognition, won it the Nobel Peace Prize, brought a ray of hope into the lives of 8.4 million women and their children, and made poor women the owners of a nationwide bank. This legal structure has been recognised, celebrated and replicated around the world. What fault has the Inquiry Commission found in this legal structure that it is now recommending to throw it into the trash can? Will the commission kindly explain this to the nation?

Grameen Bank has been built with the funds of poor women. How can the Inquiry Commission propose to hand over the majority shares of an organisation that is owned 97 pre cent by private citizens to the government? This is nothing but theft.

The people of Bangladesh know vividly whether the bank will prosper or be doomed to failure if its ownership is given to the government and its board run by government people. People are interested to know what real objective the Inquiry Commission has in its mind in making these destructive proposals.

Not only are 97 per cent of the shares of Grameen Bank owned by poor women, the bulk of the bank’s lending operation is financed through their own funds. These poor women have deposits of over eighty billion taka in the bank. Will the Inquiry Commission explain to the country why a bank that operates with its citizens’ own money surrender 51 per cent or more of its shares to the government, knowing full well that will be extremely risky, to say the least.

Some enthusiastic people must have inspired the Inquiry Commission to make such recommendations on the basis of the “grand success” of the government in managing Sonali Bank.

Do not try to snatch the poor people’s bank out of their hands.

There is no reason to believe that it will be a pleasant experience for the government to engage in a fight with the 8.4 million poor families, by changing the law with a stroke of a pen. There should be no reason to expect that the people will sit idly by and watch the organisation that has brought them recognition and glory across the world be grabbed, broken into pieces and destroyed.

This bank does not take any money from the government nor from any donor organisation. It is fully independent. The bank is owned and managed by poor women borrowers. It has been run very smoothly throughout its entire history under the present legal structure. Nothing has occurred so far to make it necessary to change this structure. There has never been any doubt raised in anyone’s mind about the quality of management of the bank; rather everyone has taken pride in it. No question has ever been raised in the media.

The Central Bank has never questioned the quality of the bank’s management, rather it has praised it each year. The borrowers have been pleased about the way the bank is run. Now, all of a sudden, the Inquiry Commission has come up with a bizarre proposal that the bank’s legal structure should be replaced by a new one. Why?

Let Grameen Bank proceed on its glorious path with the existing law. If the law is replaced as proposed by the commission, it will lead to a national disaster. Every option that the Inquiry Commission has proposed will result in disaster for the bank. We must protect this bank, keeping in mind that the fate of 40 million poor people is linked with it.

The people from whom their prized possession is being snatched away are citizens of this country. We should not forget that they are also voters. Nationalising or breaking into pieces a world-renowned privately owned institution of the poor, will be a case of extreme abuse of power by the government.

The recommendations offered by the Inquiry Commission are not worthy of any serious consideration. We must work together to resist them.

Long live Grameen Bank. Let the power of poor women prevail.

 

Muhammad Yunus is the founder of Grameen Bank and a Nobel Peace Prize laureate.