The head of Bangladesh’s central bank yesterday accused Muhammad Yunus, the Nobel laureate and founder of the trailblazing microcredit lender Grameen Bank, of being the architect of his own demise.
Atiur Rahman denied that the decision to ask Yunus to step down as Grameen managing director was politically motivated.
Earlier this year the Bangladesh Bank governor advised Yunus, who turns 71 this year, that he had knowingly breached a legal requirement that the head of domestic banking institutions leave office on their 60th birthday.
Yunus is fighting the directive. He appealed to the High Court in Dhaka, lost, and launched a final appeal. The Supreme Court is considering this and is expected to issue a decision this week.
Friends of Yunus, who won the Nobel peace prize in 2006 for helping lift millions of mostly rural Bangladeshi women out of poverty, claim the central bank directed the Grameen founder to leave at the recommendation of a resentful government.
Yunus’s supporters say that prime minister Sheikh Hasina Wazeb resents his Nobel prize and fears his potential political clout.
Not so, says Rahman. The central bank governor said that Yunus himself set the age limit at Grameen in the 1990s: the bank’s management decided that all financial services employees, from janitors up to chief executives, would have to retire at 60.
In the late 1990s the Bangladeshi government, mirroring Yunus’s thinking, instituted a legal, national requirement that banking staff retire at 60, unless special exemption is granted.
“Yunus, under Bangladeshi law, was required to seek approval to remain in his post after 60”, Rahman said. “He never sought approval and he never received approval.” Yunus denies this, vehemently claiming that his request to remain at the helm of Grameen was approved – and that he has signed papers to prove it.
“Why is Yunus formulating a law if he is not sticking to it?” Rahman asked. “If we don’t apply the law to everyone in the financial sector, if we create exceptions, there will be total chaos. Other [bank heads] will ask: ‘Why am I not allowed to stay on if Yunus is?’”
Rahman said the central bank issued departure orders to Yunus following the screening in late 2010 of a Norwegian television documentary, which asked whether Grameen executives had sought to transfer a $100 million credit line from the Norwegian government to a distant division of the micro lender.
No formal accusations were made, but the programme led to an audit of Grameen by the central bank. This in turn led to the decision to remove Yunus.
“This should not be taken personally,” Rahman said. “The central bank is a quasi-judicial body. I fully understand the sentiment, but everyone must comply with the law.”
And Rahman is adamant that Yunus’s departure will not lead to the nationalisation of Grameen or any Bangladeshi microlender.
“Grameen is run by the rule of law and by market regulations,” Rahman said. “We are the only country with strict laws on how microfinance institutions should be run, with caps on interest rates and savings rates, and governance. The future of the industry is secure, safe, sound and stable. I promise you that.”