Grameen Bank wants power back to elect borrower-directors

Posted by BankInfo on Wed, Aug 02 2017 07:58 am

The head of Grameen Bank board is seeking changes to the electoral rules of the microcredit lender so it can pick nine directors from the borrowers -- like it did since its inception.

If the changes are approved by the government, the Nobel Peace Prize-winning organisation would get back its power to elect directors -- an exercise that has been taken over by the government in 2014.

Three government-appointed directors are running Grameen Bank since February 2015 after the tenure of the nine elected directors came to an end.

Although the rules for the election of directors were changed in 2014, no election has taken place since.

Subsequently on July 16, Grameen Bank Chairman K Mozammel Haque wrote a letter to Finance Minister AMA Muhith seeking approval to change some of the electoral provisions.

“What I have said in the letter is that Grameen Bank should be allowed to run in the way it was allowed to run in the past,” Haque told The Daily Star yesterday.

He said his proposals sought to appoint one of its officials to oversee the elections of the directors and the directors would be picked through the three-tier elections.

The letter said the proposed changes aim to help solve the current complexity as the new rules are not being applied.

If the proposed amendments to the provisions are approved, the election of the directors could be organised in the quickest possible time, it said. 

“This will ensure formation of the full board. At the same time, this will diminish the importance of the ongoing case in courts.”

The GB board is a 12-member body. Nine board members are directly elected by shareholders and borrowers of the bank, while the rest, including the chairman, are nominated by the government.

When the electoral rules were framed in April 2014, it gave the central bank the task to form a three-member commission to elect the nine directors.

The rules stipulated that the election has to be held within six months after it comes into effect.

But the central bank objected to the additional responsibility.

Later, the banking division of the finance ministry amended the rules in October 2014, saying the government itself would form a three-member committee to elect the directors.

The rules said the committee will have two deputy managing directors, one from a state-owned commercial bank and another from Palli Karma-Sahayak Foundation. A former district judge will serve as the chief election commissioner.

The amended rule also changed the timeframe for electing the board of directors: it gave 12 months from the date of formation of the election commission as opposed to six months from the activation of the rules.

But still the election has not taken place.

Meanwhile, the nine elected directors demanded that their directorship in the board had remained intact as the election schedule was not announced and the election did not take place as per the new rules. They filed a writ petition in court in 2015.

The case is under trial, said the Grameen Bank chairman in the letter.

Haque's letter said many important tasks remain stuck at a financial organisation if there is an absence of a full board for a long time. This disrupts the running of all activities in a disciplined way.

If the changes are approved, the election of the directors would take place like in the past, according to a senior official of Grameen Bank.

“It would be good for the bank if the election is held,” he said, seeking anonymity as he is not authorised to make comments on issues relating to the board.

As per the previous rule, the Grameen Bank board picked an official of the bank to conduct the elections.

News:Daily star/2-Aug-2017
Posted in Banking, News