Bangladesh denies plan to take over Grameen

Bangladeshi economist and founder of the Grameen Bank Muhammad Yunus speaks to the press at the Elysee Palace in Paris on October 30, 2012. Bangladesh denied on Tuesday that it plans to take control of pioneering microlender Grameen Bank which has lifted millions of people out of poverty. (AFP/File)

DHAKA, Dhaka Division (AFP) – Bangladesh denied on Tuesday that it plans to take control of pioneering microlender Grameen Bank which has lifted millions of people out of poverty.

The statement by a government spokesman came ahead of the release of a report by a commission expected to recommend that the government increase its stake in the Nobel-Prize winning bank to 51 percent from 25 percent.

"The government does not have any plan to raise its stake in Grameen Bank from 25 percent to 51 percent," Shahedur Rahman, senior information officer of the finance minister, told AFP.

A preliminary paper by the government-appointed commission, circulated to Bangladesh's financial experts for discussion, said the government should take majority control of the bank, diluting the ownership rights of its poor borrowers who are also shareholders.

Formal release of the report could come as early as this week.

Some Bangladesh ministers argue the government needs to take control of the bank to increase supervision.

They say the bank has drifted from its original mission of lending to the poor by setting up various firms unrelated to microlending.

Grameen was founded by co-Nobel prize winner Muhammad Yunus.

Yunus, who jointly won the Nobel Peace Prize with the bank in 2006 for economic and social development, earlier slammed the preliminary commission recommendations as an "extreme abuse of government power".

The economist, who fell out with Prime Minister Sheikh Hasina after talking about going into politics, was fired as head of the bank in 2011 for exceeding the mandatory retirement age of 60.

He challenged the move in court but lost.

The court ruled that the bank, established in 1983, was a government institution, not a private bank owned by its lenders, as Yunus and his lawyers have maintained.

In an opinion piece published in Bangladeshi dailies in June, Yunus said the commission's proposal for the government to take majority control of the bank would be disastrous.

"This is nothing but snatching. Please do not try to snatch the poor people's bank out of their hands," Yunus said, comparing the move to "land-grabbing" from the bank's 8.4 million borrowers who are also its shareholders.

The borrowers are mainly women.

Along with increasing the government's control of the bank, the commission is also expected to recommend that the institution be split up into 19 separate operations to serve 19 dfferent parts of the country.

Experts fear the proposals, if approved by the government, could jeopardise the future of the bank.

"The suggested structures of the bank will not lead to financial sustainability in future. It is likely to make the institution sick," Baqui Khalily, a professor of finance said in June.