MICROCAPITAL BRIEF: Bangladeshi Grameen Bank to Be Placed Under Jurisdiction of Bangladesh Bank

The Bangladeshi government reportedly has decided to place the Grameen Bank, a Bangladeshi microfinance institution (MFI), under the direct control of the Bangladesh Bank, the country’s central bank, allegedly in order to “better monitor” the microcredit organization [1]. According to a statement attributed to the finance minister of Bangladesh, Mr Abul Maal Abdul Muhit, the central bank is examining how to regulate the bank most effectively under the country’s Banking Companies Act of 1991 [1]. Grameen Bank is currently regulated under the Grameen Bank Ordinance of 1983.

Under the new provisions, the Bangladesh Bank would regularly inspect the Grameen Bank, although it reportedly would not introduce any major changes to the bank’s ownership and shareholder structure. As of 2013, Grameen customers own 75 percent of the bank’s equity, while the government owns the remaining 25 percent [1].

As of 2012, Grameen Bank reported total assets of USD 1.9 billion, a gross loan portfolio of USD 1 billion, total deposits of USD 1.6 billion, return on assets of 0.41 percent and return on equity of 6.82 percent and approximately 6 million active borrowers. For the same year, the Bangladesh Bank reported total reserves of USD 12.7 billion.

By Anesa Kratovac, Research Associate

About Grameen Bank

Grameen Bank is a Bangladeshi microfinance institution that provides loans to poor entrepreneurs in rural areas. It was founded in 1976 by Muhammad Yunus, who, along with Grameen Bank, won the 2006 Nobel Peace Prize for his work in developing the concept of microfinance. Dr Yunus was forced to resign in 2011 by the Bangladeshi government, which owns a 25-percent equity stake in the company. As of 2012, Grameen Bank reported to the US-based nonprofit Microfinance Information Exchange total assets of USD 1.9 billion, return on assets of 0.41 percent and return on equity of 6.82 percent. For the same year, Grameen Bank reported total gross loan portfolio of USD 1 billion, total deposits of USD 1.6 billion and had approximately 6 million active borrowers.

About the Bangladesh Bank

The Bangladesh Bank (BB) is the chief regulator of the country’s monetary and financial system. Established in 1972, BB’s mission is to regulate reserves, foster development of the country’s economy and manage the country’s monetary and credit system. As of November 2012, BB operates ten branches and has a staff of 4,951. The bank’s total reserves stand at USD 12.7 billion as of December 2012.

Sources and Additional Resources:

[1] Asia News Network Online Business Publication, “Bangladesh to put Grameen Bank under govt control,” http://www.asianewsnet.net/news-51975.html

MicroCapital Article, September 25, 2013, “MICROCAPITAL BRIEF: Bangladesh Bank Asks Commercial Banks to Provide Services to Readymade Garment (RMG) Workers,” https://www.microcapital.org/microcapital-brief-bangladesh-bank-asks-commercial-banks-to-provide-services-to-readymade-garment-rmg-workers/

MicroCapital Article, August 7, 2013, “MICROCAPITAL BRIEF: Muhammad Yunus, Grameen Foundation, Grameen Bank, Brazil Foods (BRF) to Invest in Small Businesses, Genetically-Modified Organisms (GMOs) in Haiti,” https://www.microcapital.org/microcapital-brief-muhammad-yunus-grameen-foundation-grameen-bank-brazil-foods-brf-to-invest-in-small-businesses-genetically-modified-organisms-gmos-in-haiti/

MicroCapital Article, July 12, 2013, “MICROCAPITAL BRIEF: Bangladeshi Government Criticized for Proposal to Takeover or Split Grameen Bank,” https://www.microcapital.org/microcapital-brief-bangladesh-government-criticized-for-proposal-to-takeover-or-split-grameen-bank/

MicroCapital Universe Profile: Grameen Bank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Grameen+Bank

MicroCapital Universe Profile: Bangladesh Bank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bangladesh+Bank+%28BB%29

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