Bangladesh orders probe in microfinance pioneer

Muhammad Yunus` Grameen Bank provides small loans to millions of poor people.

Last Updated: Jan 12, 2011, 13:14 PM IST

Dhaka: Bangladesh`s government on Wednesday ordered a probe into Muhammad Yunus` Grameen Bank in the latest sign of friction between Prime Minister Sheikh Hasina and the acclaimed pioneer of microfinance.

Yunus is celebrated worldwide after winning the 2006 Nobel peace prize for Grameen`s much-copied microfinance scheme that provides small loans to millions of poor people, but he has fallen out badly with the Bangladeshi leader.

Grameen Bank was recently cleared after a Norwegian documentary accused it of financial wrongdoing, but Hasina has since accused Yunus of pulling a "trick" to avoid tax and said microfinance loans were "sucking blood from the poor".

Hasina, who also accused Yunus of turning Grameen Bank into his own private fiefdom, first clashed with Bangladesh`s "banker to the poor" in 2007 when he set up his own short-lived political party.

A five-member committee would look into the documentary`s allegations that USD 96 million was illegally diverted from Grameen Bank to other parts of Grameen group, Bakul Chad Das, a senior government official, said.

"The committee has been given three months to complete its task, which also includes reviewing Grameen Bank`s lending rate compared to other micro-lenders," he said.

The probe into Grameen comes as the microfinance industry is under fire in neighbouring India over accusations of profiteering through high interest rates and heavy-handed debt collection.

"The review is not directed against any person," the head of the government`s review body, AKM Monowaruddin Ahmed, said.

"We are to review the total operations of Grameen Bank, its lending and its interactions with its sister organisations."

Bureau Report