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Battle of the Banks: Bangladesh's Central Bank Fires Microfinance Pioneer Muhammad Yunus




Bangladesh's central bank fired Nobel Prize winner Muhammad Yunus on Wednesday, Mar. 2, 2011.

Bangladesh's central bank fired Nobel Prize winner Muhammad Yunus on Wednesday, Mar. 2, 2011.

Bangladesh's central bank has fired Nobel Laureate Muhammad Yunus, the celebrated microfinance pioneer who started lending small sums of money at Grameen Bank almost 30 years ago.

AFP reports that Yunus had been removed as managing director of Grameen Bank. Banking regulators—who have long complained that Yunus's operation needs stricter oversight—say that at the age of 70, he is well past the legally mandated retirement age of 60. However, it is far from clear whether he is actually going to go. A statement from Grameen Bank says that he is remaining in the position and will pick up the battle in court.

There's a political dimension to this row. Yunus has taken a strong stance against corruption, which has earned him a four-year old enmity with Bangladesh's Prime Minister Sheikh Hasina. In 2007, Yunus floated the idea of an opposition political party.

Yunus's fight in Bangladesh highlights wider problems with microfinance around the world. Once it was hailed as a poverty-buster. Now, critics say it's being hijacked by special interests and in effect is helping the rich, not the poor. In October 2010, Asia Society hosted a debate on this and related questions between Grameen's Alex Counts and Vikram Akula of SKS Microfinance.

In 2008, Yunus gave Asia Society an interview on the importance of micro-credit for poverty alleviation in Bangladesh and elsewhere.

What do you think is fuelling this controversy? Politics or precedent of law? And what do you think the future of microfinance will be? 

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