Govt lies, not Yunus about Grameen Bank

In the world of civility, it needs quite a bit of brazenness and strong reasons to accuse somebody of propagating lies, which in effect is to call him a liar. But in the strange sphere of politics, all you need is some condescending attitude and wafer thin facts to make such a statement.

When AMA Muhith, our finance minister but also an economist and technocrat, accuses Professor Muhammad Yunus of lying, we know he has been totally swaddled in the cocoon of politics. And also that he is pretty desperate, especially when facts and events are staked against what the minister says.

Muhith virtually called Yunus a liar because the microfinance guru has been airing the notion that the government has been trying to take over Grameen Bank, the co-winner of the Nobel Prize with Yunus. But is there any basis for Yunus or for that matter many others to think like that? Let’s have a reality check.

The strategy goes like this: when you want to wrench an organisation from a globally highly respected person like Yunus, you first malign that person in the most vicious way. When the human shield has been pitted and weakened, you stretch your arms into the organisation. It is easier to take it over then.

The tirade against Prof Yunus began with the sudden airing of a documentary on a Norwegian TV channel, titled “Caught in Micro Debt”, that claimed that Grameen Bank had illegally transferred …

Suddenly the Bangladesh media went up in arms, splashing the story in the most libellous ways with headlines suggesting that Yunus himself had benefited from this alleged scam. He was termed a bloodsucker and articles started coming up in newspapers about how ‘thousands of poor women were exploited’ with microcredit; how ineffective microcredit is and how people ‘committed suicide’ because they were so ‘heavily indebted’.

Just when that special quarter was gleefully basking in the glory of having punched a hole in the reputation of Yunus and Grameen Bank, the Norwegian government came up with a statement that Grameen had not embezzled the donor’s funds or used the money for unintended purposes.

This was futher strengthened by the Nobel Committee’s statement that it had awarded Yunus and Grameen the Peace Prize after it had pieced their “larger and very positive picture together”.

But by then the government had started probing the allegations made in the documentary.

Simultaneously, it found a loophole — that Yunus had violated the bank’s retirement age of 60 since he was already 71. So Bangladesh Bank removed him as the managing director.

Yunus tried to fight his case in the court which he subsequently lost on the argument that he had no ‘locus standi’ in the case, as Dr Kamal Hossain, Yunus’ lawyer, has pointed out.

So, the first step of maligning and removing him from the bank was complete. Then started the second phase.

The government started claiming that Grameen Bank is a government organisation, that it is a government bank. No matter how gross that claim is, everyone from the top level to the bottom of the Awami League and the government started harping on the same false claim.

A look at the structure, function and formation of the Grameen Bank and comparing it with other banks makes the fallacy of such a statement clear.

First, Grameen is not a conventional bank at all. It does not function like a regular commercial bank. One cannot open an account and deposit money in it. Nor does it issue cheques. One cannot import and export goods through it. It does not give term loans for industrialisation.

What it does is give small loans to poor women. The women form groups and become members of Grameen Bank and get loans on the understanding of mutual responsibility. And then they pay back on small weekly installments.

So this unusual nature of the bank made it necessary to frame a different set of rules and procedures for Grameen. Its operations and structure could not be covered by the Bank Company Act, which governs all other commercial banks.

For this very reason, the government in 1983 promulgated the Grameen Bank Ordinance and turned the microfinance institution into a statutory body. But this promulgation of the law does not make it a government-owned bank in any way.

The poor borrowers, mainly women, are the majority shareholders of Grameen with the government holding a small share of 3 percent, reduced from the initial 25 percent. This minority shareholding does not make it a government-owned bank either. Had it been the case, then IFIC bank, which is a private bank by all means, would have been regarded as a government-owned entity because the government holds over 30 percent of its share and three government nominated directors sit on its board. Similarly, Bangladesh Commerce Bank would be one. In fact, when the first generation private banks were allowed, all of them had government shares.

So the government has been trying to claim it as a ‘government bank’ from the beginning. And the cabinet just recently approved a proposal to amend the Grameen Bank Ordinance, giving full power to the Grameen Bank chairman to pick the managing director of the microfinance institution.

This is the penultimate move that the government made to take full control of Grameen because the Grameen board had been resisting any move by the government to place a managing director of its own choice.

Compare this with the current practice in the Grameen Bank. The over 8 milllion poor women who are the owners of the bank practice full democracy and elect the nine board members among themselves. They have a full say in the policy matters of the bank.

So when Yunus was fearing government takeover, he actually meant this kind of control over the bank, not ownership control.

This move is so strong that even the international community has expressed concern over the control motive and urged the government not to jeopardise the autonomy of the bank.

Now it is up to the reader to judge whether all these steps initiated by the government give credence to the fear expressed by Yunus and all friends and well wishers of Grameen Bank that the government is zeroing in on Grameen to take control of it.