Government Plans Significant Reduction In Grameen Bank Ownership From 25% To 5%2 min read
The government plans to reduce its stake in Grameen Bank by lowering its shareholding from 25% to 5% and curtailing its influence on the board by decreasing its director appointments from three, including the chairman, to one, as stated in a report.
An amendment to the Grameen Bank Act, 2013, has been drafted to facilitate these changes. The draft has been made public on the Financial Institutions Division’s website under the Ministry of Finance to gather feedback from stakeholders.
A senior official from the Division, speaking on condition of anonymity, stated that the draft was prepared following discussions with Grameen Bank’s legal advisers. The proposed changes aim to revert the government’s shareholding and board representation to the pre-2011 framework. During the 2011 removal of Muhammad Yunus as managing director, the government increased its capital contribution to reclaim a 25% shareholding in the bank.
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According to the Grameen Bank Ordinance of 1983, the government held 25% ownership, with the remaining 75% owned by the bank’s borrowers. The proposed amendment seeks to raise borrower ownership to 95%.
The bank’s paid-up share capital will be set at Tk300 crore, with borrower-shareholders gradually increasing their contributions to achieve 95% ownership. Dividends declared by the board will be distributed proportionally based on paid-up share capital.
Grameen Bank’s 12-member board currently includes three government-appointed directors, including the chairman, while nine are elected by borrowers. The proposed amendment will allow borrowers to elect 11 board members.
Under the current law, the government has the authority to appoint the board chairman. The draft amendment proposes that the chairman will instead be elected by board members from among themselves.
Additionally, the current law allows the government to appoint an acting chairman from its nominated directors if the position becomes vacant or in cases of absence, illness, or inability to perform duties. This provision is to be removed, with the new draft allowing the board to authorize any director to assume the role if necessary.
The Financial Institutions Division official noted that although the government has the right to appoint the chairman and three directors, it traditionally only appointed the chairman before the controversies surrounding Professor Yunus’ removal.
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