Zahir Uddin Ahmed
[The Financial Express on 30-03-2011 ]
It is very unfortunate for all of us in Bangladesh that the way the episode involving Grameen Bank (GB) and Dr. Yunus has been blown up in the press. Certainly, the matter could have been sorted out or solved in a more discreet, polite and sophisticated way.
The concept of collateral-less micro credit was first conceived and introduced in this sub-continent by the Murwaries, who used to charge very high lending rate and very crude and cruel methods of loan recovery. The then government was obliged to enact suitable laws to protect the poor borrowers. No doubt Dr. Yunus has elevated the collateral-less micro credit to poor people to new heights and dimensions. The contribution of Dr. Md. Yunus in expanding the role of micro-credit to poor people to ameliorate their economic conditions can not be denied.
But the continuation of Dr. Md. Yunus in the post of Managing Director (MD) for about eleven years (2000 - 2010) without the approval of Bangladesh Bank is not acceptable. Under Section (U/S) 14 of the Grameen Bank Ordinance 1983, the Managing Director of Grameen Bank is appointed by the Board with prior approval of the Bangladesh Bank, who shall be a whole time officer and Chief Executive Officer (CEO) of the Bank.
As has been reported in the press, at the time of re-appointment of Dr. Yunus in 2000 (after he attained 60 years of age), the approval of Bangladesh Bank was not taken. This was highly irregular and may be illegal too. It is highly unacceptable that a man of international repute like Dr. Yunus would continue to act as Managing Director of Grameen Bank in flagrant violation of section 14 of the Ordinance 1983 under which the Bank was established. This may be due to his paternal passion for the organization. I wonder what role the three government-nominated directors (one of whom is the chairman) played during the long period (more than 10 years) of its irregular activities. All these happened before the nose of Bangladesh Bank in a very compromising and permissive atmosphere.
I also wonder, what the American lobbyists, who are moving heaven and earth, to allow Dr. Md. Yunus to act as the Managing Director of Grameen Bank, would say if in the USA , a director of a corporate body continued in his post in clear violation of the legal framework under which the particular corporate body was constituted?
According to the Grameen Bank Ordinance 1983, the Bank was established with an initial paid up capital of Tk. 7,20,00,000.00, 25% of which was subscribed by Government of Bangladesh and 75% by borrowers shareholders.
The Board (U/S 9) of Grameen Bank consists of three persons appointed by the government of Bangladesh (GOB), nine persons elected by the borrowers shareholders and the Managing Director, an ex-officio Director without any voting power.
In the socio-political background of Bangladesh , it is highly unlikely that the 8.0 million (80 lakh) borrowers/shareholders elected nine (9) Directors of the Board out of their free will, without any coercion or undue influence from the management. It appears to me that the seed of one-man rule (domination) was embedded U/S 9 of the Grameen Bank Ordinance, 1983. To say the least, although theoretically a novel idea, it was an utopian idea that the mostly illiterate borrower/shareholders, who are always at the mercy of the Bank Management, would be able to exercise their right of vote freely. Further the nine directors elected by the borrowers/shareholders, given their socio-economic background, it is very doubtful whether they would be able to discharge their duties in directing and supervising the operations of Grameen Bank.
The main objective of Grameen Bank, inter alia, is to assist the landless poor persons for all types of economic activities including purchasing shares of any corporate body object of which is to provide services to landless persons, carrying out survey and research relating to the improvement of economic condition of the landless persons.
Against the above background, my comments would be:
1. The lending rate charged by Grameen Bank should not be more than the cost of borrowed fund. It should be at break-even point i.e. no profit - no loss. This is a specialised financial institution for the benefit of the landless poor people.
2. There is no scope for giving loan to privately owned business enterprises or acquiring the shares of any corporate body whose object is not providing services to landless persons. If this has taken place, the persons responsible should be brought to book.
3. The provision of forced saving if any, calls for proper investigation and follow-up.
4. The alleged cruel debt recovery process needs to be thoroughly investigated and if needed, legal protection to be given to the poor landless people.
5. In the western world, we see that even the members of royal family and cabinet members are taken to task by ordinary traffic police for violation of rules. No body should be above the law.
I would conclude by saying that Dr. Yunus is a very successful entrepreneur. Begum Matia Chowdhury, Minister for Agriculture has recently rightly commented, in the Jatiyo Sangsad that "Dr. Md. Yunus is a good salesman, sells his goods efficiently". Dr. Md. Yunus has spoken about corporate social responsibility (CSR) and transparency at home and abroad. I for one, naturally expected that Dr. Yunus would practice what he preaches. But I was greatly disappointed to read the book published by Grameen Bank Prokolpa (1982) entitled, "Beltoil Grameer Zarimon and Other" which contains a number of case study of Grameen Bank loans granted to individual poor people. The case study has not shown the rate and amount of interest charged, the rate and amount of compulsory saving, the rate and amount of emergency/disaster fund or other subscription/ membership fees, if any. I do not mind if the micro credit granting bodies charge even 100% interest so long they are transparent in their dealings and activities.
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Mr Zahir Uddin Ahmed FCA, FCMA is President of Institute of Cost & Management Accountants of Bangladesh (ICMAB) and a former President of Institute of Chartered Accountants of Bangladesh (ICAB ) and South Asian Federation of Accountants (SAFA). He can be reached at the following e-mail: icmab@accesstel.net
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