Muhammad Yunus has become synonymous with Bangladesh's Grameen Bank and its pioneering efforts to lend small amounts of money to the poor, in a strategy known as microfinance.
But on Wednesday, Bangladesh's central bank fired Yunus--a Nobel Prize winner--because he had surpassed the country's mandatory retirement age of 60 (Yunus is 70) and because he did not receive the Bangladesh Bank's approval when he was appointed managing director of Grameen in 1999. Hours later, the bank revised its statement, noting that the situation had now become a "legal issue" and that Yunus is "accordingly continuing in his office."
Yunus, of course, has been past Bangladesh's legal retirement age for almost a decade. So what's really going on here?
The BBC explains that Yunus had a falling out with Bangladeshi Prime Minister Sheikh Hasina back in 2007 when he tried to establish a new party to challenge the country's two-party system. More recently, in December, Hasina accused Yunus of "sucking blood from the poor" and launched an inquiry into the bank's affairs amidst never-proved allegations that Grameen engaged in improper bank transfers. "To really understand Yunus' ouster," says Jyoti Thottam at Time, "look to Bangladesh's intensely personal political rivalries." But she adds that Bangladesh Bank, in walking back its firing of Yunus, has given a "sign that [Yunus] has found enough political support in Bangladesh to hang on for some time longer."
This specific dispute may ultimately be resolved in court, but analysts say there are larger implications.
David Bergman at New Age, for example is reporting that the controversy could have diplomatic consequences. He says U.S. officials have informed Hasina that they'll cut off "high-level diplomatic interaction" with Bangladesh until the government stops harassing Yunus.
Felix Salmon adds that political corruption could crop up in Bangladesh if the government increases its stake in Grameen, and the larger cause of microfinance could be threatened: "Grameen is the shining example of how microlenders can avoid disastrous implosions by dint of being owned by their borrowers. If that changes and it becomes the shining example of how governments can swoop in and seize ownership and control for their own ulterior motives, then it becomes very hard to envisage any ownership model which looks strong and sustainable over the long term."
Yet critics, according to the BBC, charge that the global microcredit movement has been discredited. "In India," the BBC says, "it has been alleged that onerous conditions placed on borrowers has led to a spate of suicides."
This article is from the archive of our partner The Wire.