Thursday, March 10, 2011

Microfinance founder Yunus terminated by Bangladesh government

Muhammad Yunus, head of the Grameen Bank and Nobel Laureate, was thrown out of his placement by the Bangladeshi government. Yunus, the original head of Grameen Bank, is popular for his work in the arena of microfinance, lending small loans to the poor to help them start businesses. Yunus is a noted and vociferous critic of the Bangladeshi government, and some feel it is only an intimidation tactic by the government. Source for this article – Microfinance pioneer Yunus fired by Bangladesh government by MoneyBlogNewz.

Trying to get Nobel Prize winner out

Yunus was forced out of his Grameen Bank placement. NPR reports the Bangladeshi government is responsible for this. While director of Grameen Bank by Bangladesh Bank which is the central Bangladesh Bank in the nation, Yunus was ordered out of the position after winning the Nobel Peace Prize in 2006. As Bank directors are required to retire when 60 years old, Bangladesh Bank claims that Yunus was not complying. Yunus is 70, however Grameen Bank was founded under a law passed in 1983 which exempts Yunus from the statute. He was given an indefinite term of office as managing director of Grameen Bank in 2000, when he reached the age of 60. Yunus is still in the job while Grameen is combating this.

Microcredit icon and government fight continuously

For years Yunus and the Bangladeshi government have been fighting. Yunus has previously accused the government of corruption, while government officials termed the small loans that Grameen lends to the impoverished as “sucking the blood from the poor.”. In 2007, Yunus tried to start a political party that failed. Officials have been looking at the operations of Grameen Bank to root out any possible malfeasance for months, after allegations were made of an improper funds transfer, according to the New York Times. All funds were redeposited after Grameen transferred donations from the Norwegian government straight to a Grameen affiliate without the Norwegian government finding out over it. This amount was for $100 million.

Key figure in fight against poverty

Many know and love Yunus and Grameen Bank. This is due to the microfinance loans used to battle poverty in the world by the Bank. Very poor, mostly women, are able to get small loans from Grameen Bank to be able to get a small industry started. For instance, a very poor clothing maker could get a microloan for a sewing machine and fabric and set up a business and an income. Women make up 97 percent of Grameen’s borrowers, according to USA Today, and the Bank has more than $10 billion in loans. The 2006 Nobel Peace Prize award was given to Yunus and Grameen Bank due to help with poverty conditions. Bangladesh did much better after these loans were made. Many feel like putting the poor in a placement where they now have debt is a poor choice since it encourages a bad practice, getting the microcredit model criticism. Others are worried because microlending in other countries has lead to violence when it comes to collecting payments and other corrupt practices.

Articles cited

USA Today

New York Times


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