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Yunus Open to ‘Give And Take’ to Resolve Grameen Succession

Nobel Peace Prize Winner Muhammad Yunnus
Muhammad Yunus, managing director of Grameen Bank. Photographer: Kimimasa Mayama/Bloomberg

Nobel Peace Prize winner Muhammad Yunus, who is fighting his dismissal as head of Bangladesh’s Grameen Bank, said he’s willing to “give and take” with the government to resolve the stalemate.

Yunus, 70, appealed to Bangladesh’s top court on March 9 against a High Court decision that upheld his removal as the managing director of the microlender. The central bank had written to Grameen saying Yunus breached retirement rules by staying at the helm past age 60.

Differences between Yunus and Prime Minister Sheikh Hasina’s government began in December last year when Norwegian television reported misuse of aid to the lender. Grameen denied any wrongdoing. The attempt to remove Yunus prompted the U.S. to ask Bangladesh to resolve the crisis in order to avoid affecting relations between the two nations, according to Robert Blake, assistant secretary of state for South and Central Asian affairs, who visited Dhaka March 22.

“There is a lot of misinformation,” Yunus, wearing his trademark long, hand-woven, check shirt, said in an interview in his office in Dhaka. Grameen is willing to talk to the government “to understand, to see what is their viewpoint and what is our viewpoint. I am trying to do the transition for a long time. I was looking for an opportunity to get through the process so that the whole bank does not get shaken up.”

The U.S. has provided more than $5 billion of development assistance since 1971 to Bangladesh, according to U.S. government data.

Recovery Rate

Bangladesh’s government owns 25 percent of Grameen, Yunus said, while customers hold the balance. The bank has lent $10.3 billion since it began operations in 1976 and had a loan recovery rate of 97 percent as of the end of February, according to the lender’s website.

The government asked Yunus to step down from Grameen until the investigation was over, Finance Minister Abul Maal Abdul Muhith said in an interview. The offer also included Yunus’ appointment as emeritus fellow with the bank after stepping down as its head.

“We have been publicly talking to them,” Muhith said in his office. “We have made some offer. So there is scope for discussion. Obviously the offer we made is not acceptable to him, so he has to make a counter offer.”

‘Vast Influx’

Grameen was initially helped by aid from donors including the Ford Foundation, Japan International Cooperation Agency and Germany’s state-owned development bank Kreditanstalt fur Wiederaufbau, according to the bank’s website.

Many Bangladeshis “resent the vast influx of foreign money, which has turned Grameen and Yunus into a rival to the democratically elected government,” Jagdish Bhagwati, professor of economics at Columbia University, said in an article published on March 24 by Project Syndicate. It’s “a phenomenon that no government would tolerate.”

Grameen Bank last received overseas funds in 1998 and doesn’t plan to tap foreign donors, according to its website. It lends to its 8.35 million clients, of which 97 percent are women and more than 112,000 beggars, using funds from its deposits. The bank employs 26,000 people and has 2,565 branches across the South Asian nation where the Asian Development Bank estimates almost half the population of 144 million lives on less than $1.25 a day.

U.S. Microfinance

On March 31, movie theaters in the U.S. will screen a documentary titled “To Catch a Dollar: Muhammad Yunus Banks on America,” based on Yunus’s move to replicate his microfinance model in the U.S.

“His eminence underscores the need for solving the problem,” Debapriya Bhattacharya, distinguished fellow at the Centre for Policy Dialogue in Dhaka, said in an interview yesterday. In case the stalemate continues there’s concern borrowers may renege on paying installments, he said.

Microlending has also come under pressure in India after reports that rising debt payments led as many as 70 people to commit suicide in Andhra Pradesh. On Oct. 15, the government of the state imposed restrictions that bar microlenders’ collection agents from visiting borrowers and require companies to get local authorities’ approval for new loans.

“We have been lobbying for a regulatory authority in Bangladesh and as a result created the microcredit regulatory authority in Bangladesh,” Yunus said. “That’s what I have been recommending for India also.”

India’s central bank in January recommended microfinance companies cap interest rates at 24 percent and limit loans to individual borrowers in a bid to help revive lending to the South Asian nation’s neediest people.

Some 260 microlenders had 26.7 million borrowers and 183.44 billion rupees of loans outstanding as of March, according to the Microfinance India State of the Sector Report 2010.

“If you allow microcredit programs each to run their own way, it will be counterproductive,” Yunus said. It will hurt the poor in India, he said.

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