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Open memo to Dhaka

Unfortunately the government of Bangladesh’s central bank, Bangladesh Bank – which regulates Grameen Bank – has instructed the board of Grameen to immediately remove founder Muhammad Yunus as Grameen’s managing director. This intrusion is now under appeal in the courts and will be decided imminently. Recently, international civil society has been amplifying its voice on the issue, and those who care about sustaining this movement may be able to prompt the government of Bangladesh to reverse its stand by contacting them now, as global opinion does matter to them.

An independent Grameen with Yunus as its leader is eminently worth saving. Yunus and the Grameen Bank he created won the Nobel Peace Prize in 2006. He has inspired countless others to adopt the model in other countries, including in the United States. A shining example of private enterprise at work, the clients of Grameen – women who began with nothing but a small loan – now own 75 per cent of the shares in the Grameen Bank and 96.5 per cent of the paid-up equity of the bank.

Bangladesh Bank’s order was a sudden and baffling effort to overturn a decision made more than a decade ago by the Grameen board (which consists of nine women who are clients and shareholders, plus three government officials) to grant an exception to its normal retirement provision so that Yunus, now 70, could continue to serve as Grameen’s managing director. This dictatorial interference completely contradicts the government’s own longstanding insistence that banks operate as independent private institutions, foregoing government ownership, not to mention its forbearance for 10 years of Yunus’ leadership beyond the originally stipulated retirement age of 60.

The whole world benefits from the Grameen Bank. It may be located in Bangladesh, but it is a global icon and serves a global purpose. Arguably, more than 125 million microcredit borrowers around the world owe their access to financial services to the model and standards set by Grameen, which served to catalyse the microfinance movement globally. When he was awarded the Nobel Peace Prize, the committee stated “…Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty. Microcredit is one such means. Development from below also serves to advance democracy and human rights.”

The genius and essence of Grameen Bank is rooted in its total commitment to its borrowers and no one else. Governmental interference can only unsettle borrowers’ reciprocal commitment to the bank, which has been demonstrated by their extraordinary rates of loan repayment, their ownership of the bank’s equity, their depositing some $800 million in the bank (two-thirds of Grameen’s total) and their highly successful management of its board and mission. Bangladesh has until now shown remarkably good judgment in protecting the independence of its banks. It would be beyond comprehension if it were to violate that policy now with regard to the most independent bank of all.

Let us all call on the government of Bangladesh to continue its long-standing tradition of respecting the independence of Grameen Bank. Direct appeals to Bangladesh’s Prime Minister Sheikh Hasina and to Bangladesh’s ambassadors to foreign nations, as well as to the UN, may prompt their restoration of the independence of Grameen Bank and Yunus’s extraordinary leadership.

Eliot Daley is a writer based in Princeton, New Jersey, with a special interest in microfinance. This article was written for the Common Ground News Service