Bangladesh’s government ordered Nobel laureate Muhammad Yunus from his post as head of his microfinance bank on Wednesday — a humiliating blow for an activist whose revolutionary idea of giving out small loans lifted many out of poverty. But the Grameen Bank said he remained in charge and that it would fight the decision.
The demand for Yunus’ removal as Grameen’s managing director capped a string of problems that faced the outspoken government critic, including an apparently politically motivated defamation trial and accusations of an unauthorised bank transfer 15 years ago.
Bangladesh’s central bank ordered him out, arguing that he violated the country’s retirement laws, AFM Asaduzzaman, an official at Bangladesh Bank, said. Grameen Bank has been notified by letter, Asaduzzaman said, providing no further details. The government owns a 25% stake in Grameen, while the remainder of the bank is owned by its borrowers.
In a statement, however, Grameen said Yunus was still holding his post.
Yunus is “continuing his work as the managing director of the bank,” said the brief statement signed by Jannat-E-Quanine, general manager of the bank. “Since it’s a legal issue, we will fight it legally.”
Yunus founded the bank three decades ago, pioneering the concept of reducing poverty by making tiny loans to the poor. His work, which spurred a boom in such lending across the developing world, earned him and the bank the 2006 Nobel Peace Prize.
Recently, Yunus has been under pressure at home. In addition to his legal troubles, Prime Minister Sheikh Hasina has accused Grameen Bank and other microfinance institutions of charging high interest rates and “sucking blood from the poor borrowers.”
But he remains a hero to the poor. Shefali Akter, 25, who has taken out two loans totaling $1,000 from Grameen since 2002, called Yunus’ removal “bad news.” “The bank is all about him,” she said.
Efforts to remove Yunus from Grameen intensified in recent weeks, with the central bank claiming that the 70-year-old Yunus violated the country’s retirement laws by staying on as the bank’s head well past the mandatory retirement age of 60.
Grameen Bank says the normal retirement rule does not apply to it because the bank is run under a special 1983 law. Yunus was appointed managing director of the bank for an indefinite period in 2000, when he reached 60, the bank says. Yunus could not be immediately reached for comment on Wednesday. On Tuesday, finance minister Abul Mal Abdul Muhith told reporters he had received a letter from the central bank accusing Yunus of flouting the retirement rules.
Khondoker Muzammel Huq, chairman of Grameen, received a copy of the letter and presented it Monday to the bank’s board, but adjourned the meeting without making a decision on it.
Controversy swirled around Yunus after a Norwegian television documentary that screened in December accused him of transferring Norwegian development funds from Grameen Bank to another venture without prior approval in 1996. Pressure by the Norwegian Embassy in Dhaka resulted in the funds being transferred back in 1998, and the Norwegian government has said there was no indication Grameen was engaged in corruption or embezzlement.
Still, the Bangladesh government set up a committee in January to look into the allegations. Yunus is also facing a defamation trial in connection with a 2007 interview in which he was quoted as saying, “They (politicians) are only after money. Their politics has nothing to do with ideology.”
His lawyers have argued that since his comments were not directed at any specific person, they do not constitute defamation.
At the time of the remarks, Bangladesh was under a state of emergency and many politicians, including Hasina, the current prime minister, were behind bars on charges of corruption. An interim government backed by the country’s influential military eventually handed over power to the elected government of Hasina in January 2009.
Tracking Yunus
1976: Muhammad Yunus approached banks to seek micro-credit for rural poor. Banks turned him away because the intended recipients were not credit worthy (as per banks’ definition) and had no collateral to offer
1976: Grameen Bank originated from a small action research project undertaken in 1976. 75% of its paid-up capital is now owned by the bank’s shareholders its borrowersand 25% by the government
Jan 1977 : Formation of Grameen Bank I; Experimental Branch of Agricultural Bank; Yunus started giving micro-credit to poor rural women
Oct 1, 1983: The pilot project began operations as a full-fledged bank and was renamed the Grameen Bank to make loans to hapless Bangladeshis. Yunus and his colleagues encountered everything from violent radical leftists to the traditional clergy who told women that they would be denied an Islamic burial if they borrowed money from the bank
Oct 2: Mal Abdul Muhith unexpectedly named the new finance minister and managed to make Grameen Bank its own financial institution, with the government owning 60% of it Yunus had wanted Grameen to be owned entirely by the borrowers, but he is still waiting for this. In the meantime, Grameen grew at over a hundred branches a year
Dec 31, 1996: A Norwegian documentary alleged that the bank had misused money donated by the Norwegian government, improperly transferring it from the bank to another Grameen non-profit business, Grameen Kalyan. A government investigation in Norway confirmed that the money had been improperly moved but said no money had been stolen or misused. The letter said the bank accounts did “not reflect that any revolving fund for housing loan is in operation in Grameen bank”. The Norwegian Embassy expressed its concern about how it was “not informed” about the deal between the two organisations, while further adding that it “was contrary to the quoted clause of the agreement between the governments”
Mar 26, 1997: Grameen Phone launched service in urban Dhaka on March 26, 1997. It makes its profits by serving wealthier urban customers. But from the point of view of the Grameen family and its strong anti-poverty mission, the for-profit, urban-only Grameen Phone exists for only one reason: To fund, with its profits, the extension of cell phones into rural Bangladesh in order to provide entrepreneurial opportunity to Grameen Bank members through Grameen Phone
Jan 8, 1998 : Grameen Kalyan had other and far wider purposes and lacked a licence to engage in lending activities. A letter from Grameen Bank, dated January 8, 1998, points out that money that was loaned back to the bank was used for the same purpose as was the original intent of the agreement. Grameen Kalyan could require repayment of the loan
Oct 13, 2006 : Muhammad Yunus and Grameen Bank were jointly awarded the Nobel Peace Prize. Yunus, an economist, thought that giving loans to the poorest of the poor would not only help them, but could be a successful business too
Jan 20, 2010 : Nurjahan Begum was appointed to the board on January 20, 2010. She is currently serving as deputy MD of Grameen Bank, and also as honorary MD of Grameen Shikkha (education), a non-profit organisation in the Grameen family.
Source: Financial Express
RSS Feed
Twitter
8:30 AM
Blogger
