Grameen Bank to come under BB supervision
Thursday, 12 May 2011
Nazmul Ahsan
The government plans to bring Grameen Bank (GB) under the direct supervision of the Bangladesh Bank (BB) to be guided by Bank Company Act, 1991. The move, according to official sources, is aimed to establish accountability and transparency in the banking activities of the GB. The GB Ordinance, 1983 will be amended for the purpose. A proposal in this connection will soon be placed to Prime Minister Sheikh Hasina for approval. The Ministry of Finance (MoF) is now busy finalising a set of proposals to bring about reforms in the GB, a top official in the ministry said. A good number of recommendations including that of obtaining mandatory prior approval from BB in formulating regulations for GB, made by the Review Committee on GB Affairs, have been considered by MoF for the approval of Prime Minister, he added. Currently, the banking activities of GB are guided by GB Ordinance, 1983. Only two clauses (44 &45) of Bank Company Act, 1991 are applicable to GB. According to the government move, the board of directors of Grameen will be reconstituted with the induction of experienced professionals having expertise in economics, banking and micro-credit operation. The directors - both sponsor and nominated- must qualify 'fit and proper' test of BB. "The similar clause of Bank Company Act, 1991, which is applicable to all scheduled banks for appointing bank directors, will be applicable to GB," a top finance ministry official said. The paid-up capital and authorized capital of GB will be increased, which is now Tk 3.50 billion and Tk 547 million respectively. However, it is not yet final whether the capital bases of GB will be similar to those of other operating commercial banks. Sources said the GB Ordinance will be amended so that prior permission of BB becomes mandatory to give effect to any banking regulation of GB. Presently, board of directors of Grameen, according to GB Ordinance, is empowered to formulate regulations for the bank, which does not need any prior or post approval from the central bank. According to the move, tax at source on the income generating from bank deposit of Grameen , who are not members of GB, will be imposed like other commercial banks. The National Board of Revenue will issue circular in this connection soon after the approval from the Prime Minister, a source said. The Review Committee on GB submitted its report on April 25, this year. It put forward 27 - point recommendation to revamp the Grameen Bank. The MoF is yet to decide on two major recommendations of the review committee. One is the merger or amalgamation of all 34 subsidiary organizations of Grameen and the other is the constitutions of a Grameen Bank Reform Commission, sources said. "We will finalise our position on the two major recommendations soon," a top MoF official said.
The government plans to bring Grameen Bank (GB) under the direct supervision of the Bangladesh Bank (BB) to be guided by Bank Company Act, 1991. The move, according to official sources, is aimed to establish accountability and transparency in the banking activities of the GB. The GB Ordinance, 1983 will be amended for the purpose. A proposal in this connection will soon be placed to Prime Minister Sheikh Hasina for approval. The Ministry of Finance (MoF) is now busy finalising a set of proposals to bring about reforms in the GB, a top official in the ministry said. A good number of recommendations including that of obtaining mandatory prior approval from BB in formulating regulations for GB, made by the Review Committee on GB Affairs, have been considered by MoF for the approval of Prime Minister, he added. Currently, the banking activities of GB are guided by GB Ordinance, 1983. Only two clauses (44 &45) of Bank Company Act, 1991 are applicable to GB. According to the government move, the board of directors of Grameen will be reconstituted with the induction of experienced professionals having expertise in economics, banking and micro-credit operation. The directors - both sponsor and nominated- must qualify 'fit and proper' test of BB. "The similar clause of Bank Company Act, 1991, which is applicable to all scheduled banks for appointing bank directors, will be applicable to GB," a top finance ministry official said. The paid-up capital and authorized capital of GB will be increased, which is now Tk 3.50 billion and Tk 547 million respectively. However, it is not yet final whether the capital bases of GB will be similar to those of other operating commercial banks. Sources said the GB Ordinance will be amended so that prior permission of BB becomes mandatory to give effect to any banking regulation of GB. Presently, board of directors of Grameen, according to GB Ordinance, is empowered to formulate regulations for the bank, which does not need any prior or post approval from the central bank. According to the move, tax at source on the income generating from bank deposit of Grameen , who are not members of GB, will be imposed like other commercial banks. The National Board of Revenue will issue circular in this connection soon after the approval from the Prime Minister, a source said. The Review Committee on GB submitted its report on April 25, this year. It put forward 27 - point recommendation to revamp the Grameen Bank. The MoF is yet to decide on two major recommendations of the review committee. One is the merger or amalgamation of all 34 subsidiary organizations of Grameen and the other is the constitutions of a Grameen Bank Reform Commission, sources said. "We will finalise our position on the two major recommendations soon," a top MoF official said.