Newly approved ordinance ends government’s control over Grameen Bank by 15 percent

The interim government has agreed to a proposed amendment to the law that governs Grameen Bank, the Nobel Peace Prize-winning microfinance institution, to reduce government control and delegate more power to its borrowers.

On Thursday, at a meeting chaired by Chief Advisor Muhammad Yunus, the Advisory Council gave both initial and final approval to the draft of the Grameen Bank (Amendment) Ordinance, 2025.

Once signed by the president into an ordinance, it will bring major changes to the structure and control of the bank.

The government’s share in the bank will be reduced from 25 percent to 10 percent, while the borrowers, or beneficiaries, will hold the remaining 90 percent.

With the new ordinance, the control of Grameen Bank will shift from the government to Bangladesh Bank, the country’s central bank.

Environment Advisor Syeda Rizwana Hasan shared the decisions of the Advisory Council at a press conference held at the Foreign Service Academy in Dhaka.

She said, “Grameen Bank used to operate with a strong set of values. The borrowers played a role in running the bank. But in recent times, Muhammad Yunus was politically targeted, and the bank’s ownership model was changed to give the government more control.”

“This new ordinance reverses that. Previously, the paid-up capital was 25 percent from the government and 75 percent from borrowers. Now it will be 10 percent from the government and 90 percent from the borrowers.”

The advisor also said that while the bank used to serve only the landless, it will now serve those who are “impoverished” as well.

“Besides union-level areas, city corporations and municipalities have now been included. Regarding the board of directors, nine members will be elected from among the borrowers. Out of those nine, three will be nominated, and one of them will be appointed as chairman. The ordinance also declares Grameen Bank as a public interest organisation,” explained Rizwana.

Grameen Bank was originally formed under the 1983 Grameen Bank Ordinance to provide collateral-free microloans to underprivileged, rural people, especially women.

That ordinance was repealed, and the bank was operating under the Grameen Bank Act, 2013 until now.

Yunus was the bank’s managing director from its founding in 1983 until 2011.

As recognition of their work to fight poverty through microcredit, Grameen Bank and Yunus received the Nobel Peace Prize in 2006.

Once the new ordinance is issued, the bank’s paid-up capital will be Tk 3 billion. Borrowers can gradually increase their share in the capital to 90 percent, based on their contribution towards it. Any dividends declared by the board will be distributed proportionally based on ownership.

Under the new law, the government will no longer appoint the chairman for Grameen Bank. Instead, the chairman will be elected by the board members. Of the 12-member board, 11 will be elected by the bank’s borrowers.

The chairman’s powers will be reduced, giving more control to the board. The board will appoint the managing director with the help of a selection committee.

For any rules or problems arising under the ordinance, the bank’s board will seek approval from Bangladesh Bank instead of the government.

The draft also allows Grameen Bank to open branches in urban areas across the country, instead of only rural areas.

Currently, the bank requires government permission to open branches. With the new ordinance, the permission will come from Bangladesh Bank.

The current law does not mention Yunus’s early microcredit work in Jobra village. The new ordinance includes a clarification on this.

It says the “Grameen Bank project” refers to the microcredit program started in 1976 in Jobra village under the Economics Department of Chittagong University.

This project was later approved by Bangladesh Bank and joined by other banks, including Bangladesh Krishi Bank.

During the Awami League government, Yunus was removed from his role as managing director of Grameen Bank, citing that he had crossed the age for retirement. He challenged the decision in court but was not reinstated.

Over the past 15 years, former prime minister Sheikh Hasina and her government frequently criticised both Yunus and Grameen Bank. After she left the country during a mass movement on Aug 5, the interim government was formed under Yunus’s leadership.