Grameen Bank Under Threat
Since 2010, the government of Bangladesh has waged a campaign against the globally respected microfinance institution Grameen Bank. Currently owned by the bank's poor, rural borrowers – 96 percent of whom are women – the government is threatening to take control of the bank. This move would undermine Grameen Bank's longtime success, the power of the women who run it, and the independence of civil society throughout the country and microfinance institutions around the world.
Over the last two years, the Bangladeshi press has created a sustained drumbeat of pressure opposing the government's plans by consistently publishing statements from leaders around the world defending Grameen. Continued international media attention is essential to efforts to prevent the government from taking over Grameen Bank.
On Wednesday, July 14, XX luminaries from around the world and XX members of the United States Senate and House of Representatives joined together to urge Bangladesh Prime Minister Sheikh Hasina to reject any effort that would injure Grameen Bank and the Bangladeshi people. Prominent leaders such as Desmond Tutu, Madeline Albright, Melanne Verveer, and Sir Richard Branson raised their voices in the International Herald Tribune. A group of bipartisan members of the Senate and House, including Barbara Boxer (D-CA), Michael Enzi (R-WY), John Boozman (R-AR), and Rosa DeLauro (D-CT), voiced their concerns in the Washington Post.
The international community must join this call and continue to publicly speak out in support of Grameen Bank and its 8.4 million borrowers by:
What can you do?
In the mid-1970s, Professor Muhammad Yunus helped establish the concept of microfinance through a personal loan of $27 to 42 destitute weavers and merchants in Bangladesh. In 1983, Yunus founded Grameen Bank by ordinance of the government of Bangladesh, fueled by the belief that credit and access to financial services is a fundamental human right. Today, Grameen Bank has nearly 8.4 million members – 96 percent of whom are women – and has lent over $12.5 billion, allowing millions of women and their families the opportunity to lift themselves out of extreme poverty. The Grameen model has been replicated in more than 100 countries around the world and now benefits tens of millions of others. In 2006, Yunus and the borrowers of Grameen Bank were awarded the Nobel Peace Prize for their groundbreaking work. In April 2013, the United States Congress awarded Yunus the Congressional Gold Medal.
Despite this success, since 2010 the government of Bangladesh, under the leadership of Prime Minister Sheikh Hasina, has led a politically-motivated campaign of intimidation against Grameen Bank and Yunus. After a series of attacks by the government in the spring of 2011 targeted specifically at Yunus, he was forced to resign his position as managing director of the bank in May 2011. In May 2012, the government appointed a Grameen Bank Commission to review the operations of the bank and make recommendations as to its future. The government went further in August 2012 when the Bangladesh Cabinet, presided over by Prime Minister Hasina, passed an amendment to the law governing Grameen Bank. This amendment transferred power to choose the next managing director of the bank from the existing board of directors, in which nine of the 13 members are women elected by the bank's client-shareholders, to the government-appointed Chair of the board. By removing this decision from the board, the government significantly weakened the power of the shareholders, who control 97 percent of the shares to the government's 3 percent, to govern their own institution.
After releasing an interim report in February 2013, the Grameen Bank Commission issued a working paper this June with recommendations as to the future of Grameen. Their proposals include restructuring the bank so the government holds 51 percent of shares in the bank and a majority of seats on the board of directors; breaking up the bank into 19 or more totally separate bank entities with no legal relationship among them; and transforming the bank into a private company. Each of these scenarios would undermine the bank's independence and jeopardize the success of the bank, its borrowers, and as many as 18.5 million family members.
The commission finished its term on July 20 but a final report has not yet been released. While it is not clear when the final report will be made public, it is believed that the same harmful recommendations made in the interim report will remain in the final report.
This attempt to take over the operations of Grameen Bank from its clients and shareholder-run board of directors is an extremely worrying threat to civil society writ large in Bangladesh. Bangladesh's microfinance sector reaches some 35.6 million clients – second only to India with its outreach – and its top five institutions alone reach 24.4 million clients. The concern is that if the government can go after Grameen Bank, they might decide that other microfinance institutions or civil society organizations are next. Grameen Bank's fate could also affect the independence of other microfinance institutions worldwide.
Further, a government takeover of the bank would undermine the progress that Grameen has made empowering poor women in Bangladesh and providing them the means to lift themselves out of poverty. The international community must strongly defend the independent operations of Grameen Bank and its millions of shareholders.
For more information on the history of the government of Bangladesh’s attack against Grameen Bank, please refer to the Friends of Grameen fact sheet.
Examples of Additional Recent U.S. Government Action: