Palli Sanchay Bank Bengali: পল্লী সঞ্চয় ব্যাংক), Rural Savings Bank, is a state-owned bank in Bangladesh. Md. Akram-Al-Hossain is the Chairman of the bank.
Palli Sanchay Bank is a microfinance-based financial institution in Bangladesh that is mainly run on a cooperative basis. The bank has 465 branches in 465 Upazilas of the country.
Palli Sanchay Bank focuses on small savings. The purpose of the bank is to establish a house under a farm under the Rural Development and Cooperatives Department. It is also making a significant contribution to poverty alleviation through the creation of village organizations, training them, provision of funds, and lending. Specialized Rural Savings Banks have been established for the institutionalization of these activities and for providing loans and advances and investments for their savings and acquired transactions and maintenance.
History of Palli Sanchay Bank
On 2 July 2014, the Government of Bangladesh passed the Palli Sanchay Act 2014 to form the Palli Sanchay Bank. The Bank was modeled after Grameen Bank, which was founded by Muhammad Yunus. According to the act, the government of Bangladesh would own 51 percent of the shares and members of the Ektee Bari Ektee Khamar project (One House, One Farm project) would own the rest of the shares. The bank would start with 10 billion takas authorized capital and 2 billion takas paid-up capital.
The proposal for the bank was opposed by the Bangladesh Bank and the Bank and Financial Institutions Division of the Ministry of Finance. They recommended that instead of a bank, a financial institute be created. They believed that banks would fail to do their purpose like other specialized banks. The move to create the Bank was initially opposed by the Ministry of Finance.
In 2018, the Palli Sanchay Bank announced plans to open branches in 462 Upazila (sub-district) of Bangladesh, having opened branches in 406 Upazilas by February 2018. In 2020, the bank introduced Grain Stock Loan to provide finance to farmers facing difficulty in selling their products during the COVID-19 pandemic in Bangladesh. The loans consider grain stock as collateral.
The management method of Palli Sanchay Bank
At the second meeting of the Board of Directors of Palli Sanchay Bank, various decisions were taken regarding the distribution of shares at the association level in order to recover the paid-up capital. According to the law of Palli Sanchay Bank, 49 percent of the paid-up share capital has to be paid by the association to the tune of Tk 96 crore. In other words, all the members of the village development society formed under a house-a-farm project have to pay this money.
According to the decision, for the provision of Tk 96 crore, the members will get the opportunity to buy a minimum of 2 shares and a maximum of 6 shares worth Tk. In addition, it is mandatory for each member to buy a share worth Rs. 100 per year. In this case, the members have to fulfill several conditions. Conditions: A member of the association may sell and transfer shares to another regular member or to the association. Under no circumstances may you sell or transfer shares to any irregular member or person outside the association.
At the same time, no member can purchase or acquire more than 10 shares until further notice. Members of member banks who are involved in irregularities such as defaulters, non-payment of regular savings, non-farming with loans, etc. cannot buy shares.
Specialized Palli Sanchay Bank started its journey in the form of a micro loan model with an approved capital of Tk. 1000 crore and paid-up capital of Tk. 200 crores. The Bank may from time to time, with the approval of the Government, increase the paid-up capital by keeping the capital approved by the Government Gazette and Notification unchanged. Of the Rs 200 crore paid-up capital, 51 percent will go to the government and the remaining 49 percent will go to the shareholders formed under the project.
The authorized capital will be divided into 100 million shares worth Rs. The bank has a 15-member board of directors. 6 of them will be nominated by the government. The remaining 6 members will be elected as representatives of member shareholders by administrative rules. One of the directors appointed by the government will be the chairman. The term of directors will be a maximum of 3 years. The Managing Director shall be appointed by the Board with the approval of the Bangladesh Bank. Managers can perform their duties for two consecutive terms. With the approval of the Bangladesh Bank, the Board of the Bank may appoint a Managing Director.
The managing director can remain in office till the age of a maximum of 65 years. Even if a house-a-farm project expires through the Palli Sanchay Bank, the families will be able to continue their economic activities from that fund. These families will be able to deposit their savings in Palli Savings Bank and also take loans. As a specialized bank, it conducts all kinds of economic activities, including housing, for the general members of the association and the general members of the association in foreign exchange trading business,
providing cash or in-kind loans with or without collateral for fixed-term and condition, encouraging savings, deposits, small and medium industries, agriculture and agriculture. Will carry out financing activities including investment in cottage industries.