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Old November 17, 2012, 12:11 AM
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Originally Posted by cricket_pagol
@Navo: Can you tell me about the recent changes in constitution of Grameen Bank. Do you think the govt overreached to make sure that Younis have no say in determining his successor. I agree with argument about need to follow rule of law, but at the same time when I see how rule of law is being applied selectively and there is no outcry about it... I just end up eroding my faith in our legal system.
@Cricket_pagol, to answer that question, you have to take a step back and look at what GB's legal status is. To do so, you go to its founding document i.e. The Grameen Bank Ordinance, 1983. It has to be noted how GB is founded and regulated by a statute i.e. a piece of legislation rather than incorporated under a statute like the Companies Act, 1994 and regulated by the Bank Companies Act. In fact, the latter two Acts don't even apply to GB as indicated by Section 4 of the GB Ordinance. Also, without going into excessive detail, it is clear from a plain-reading of this statute that the GB Ordinance has granted substantial powers to both the Government and the Bangladesh Bank. It has powers over how the Bank is administered, governed and dissolved if necessary. The special status of GB has been further affirmed by the Appellate Division of the Supreme Court when they ruled that GB is a 'statutory public authority' (i.e. a part of the State) and Dr. Yunus is a 'public servant' and thus his tenure is governed by the rules and regulations that govern other public servants. (This is the basis on which Dr. Yunus' petition to the Supreme Court was dismissed) So, as a State entity, any change made to how Managing Directors are appointed would have to be authorised by a legislative amendment to the Grameen Bank Ordinance just as a special resolution needs to be passed for a company's articles of association to be amended.

So that's the 'legality' of such a move. Now, whether it is a good idea or not to amend the Governing Document and have the govt-appointed Chairman have greater say in how GB's MD is appointed is another matter. I have to think about that a bit more. I have found that India and a few other countries in Europe are considering quite rigorous and restrictive micro-finance legislation in their respective legislatures at the moment though....

And regarding the point you addressed to zman, I'd recommend reading the DFID policy brief (and full report if you're really interested) on the impact of microfinance that I linked above. It not only considers microfinance's impact substantively but also the accuracy of over 3000 studies conducted on microfinance. The fact that the study is funded by an organisation that has been a long-time supporter and financier of MFIs adds greater significance to its findings.
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