Yunus Sees New Law Spelling Beginning of the End for GrameenRanjeetha Pakiam and Kartikay Mehrotra
Muhammad Yunus, the Nobel laureate and outcast founder of Grameen Bank, said Bangladesh’s move to tighten controls on the microcredit lender is “heart-breaking” and called for an end to state interference.
Parliament passed legislation yesterday increasing the central bank’s supervisory powers and allowing the government to set new rules, state-run Bangladesh Television reported.
“The government has opened doors to take almost 100 percent control of the bank, which is very damaging in a country like Bangladesh where politics and government gets mixed up,” Yunus said in an interview in Kuala Lumpur today. “That will be the beginning to the end and we shouldn’t allow it to happen.”
Richard Branson and Paul Volcker were among 40 prominent people who signed a letter this year urging Bangladeshi Prime Minister Sheikh Hasina Wajed not to seize control of the microfinance lender. Yunus, 73, was forced to relinquish control of Grameen Bank in 2011 after breaching retirement rules by staying on as its head after turning 60, Bangladesh Bank said at the time.
“What is lost is Yunus’s influence and control,” said S. Chandrasekharan, director of the South Asia Analysis Group, based in suburban New Delhi. “The father figure of Grameen Bank is gone. But Grameen Bank as an institution won’t die. It’s too influential in the economy. It can’t end.”
Bangladesh Finance Minister Abul Maal Abdul Muhith didn’t answer two calls placed to his mobile phone today.
Grameen, which means “rural” or “village” in Bengali, had 8.45 million borrowers as of September, 96 percent of whom are women, according to an Oct. 7 statement on the lender’s website. The bank has lent $14 billion since it began operations in 1976 and had a loan recovery rate of 97 percent as of July, according to its website.
“It breaks my heart and everybody else’s hearts who are behind Grameen Bank after 37 years of work,” Yunus said. “We created the bank in a way to be owned by the poor women, and our legal framework that we had until yesterday ensures that it’s owned by the poor women and it’s managed by poor women and there is no room for the government to interfere in the bank.”
The South Asian nation is scheduled to hold elections 90 days from Oct. 25. The opposition has promised to reverse any “damaging” measures taken by the ruling government against the bank, Yunus said.
Grameen Bank’s borrowers, shareholders and their families account for almost a quarter of Bangladesh voters and could impact the election, he said. The nation has a population of more than 160 million, according to data compiled by Bloomberg.
Yunus said he has no personal political aspirations and doesn’t want to return to head the bank, which is currently without a managing director. Its chief should be decided by Grameen’s members and not the government, he said.
Hasina said on Nov. 5 she planned to form an all-party government within 15 days to oversee the January election, according to the Press Trust of India. The Bangladesh Nationalist Party-led opposition has threatened a poll boycott and called for strikes to press for a neutral caretaker regime. At least 26 people have died in political violence since Oct. 25, the news service said.
Accusations that Grameen’s lending rates were too high were unfounded as they are lower than the government’s ceiling of 27 percent for fixed interest rates at microcredit organizations in the country, Yunus said.
Microfinance, typically aimed at households earning less than $2 a day, was brought to prominence by Grameen Bank, for which the lender and Yunus won the Nobel Peace Prize in 2006. The recent global financial crisis has increased demand for microcredit around the world, Yunus said.
“The whole capitalist system is in crisis,” said Yunus. “It has revealed its big weaknesses that it cannot cope with the needs of the people.”
New microcredit programs are being started in countries including the U.K. and the U.S., said Yunus. The social business model can be adapted to tackle problems such as unemployment, poverty, health care and drugs, the economics professor said.
“Solve this in a business way, rather than leave things to the government.”
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