By: Nava Thakuria

Over widespread international and domestic objections, Bangladesh President Abdul Hamid Sunday signed legislation bringing the world-famous Grameen Bank under the supervision of the country’s central bank. The Bangladesh Parliament had passed the bill on Nov. 5.

The move came during deepening political chaos, with the Bangladesh National Party-led 18 party opposition alliance, which has opposed the plan to take over the bank, distracted by the refusal of the government of Sheikh Hasina Wazed’s Awami League to dissolve itself in favor of a neutral caretaker government in preparations for national elections scheduled for early next year.

The BNP, led by Hasina’s bitter enemy, Begum Khaleda Zia, called a 72-hour general strike starting Sunday to protest the government’s refusal to dissolve in favor of a neutral government. Four BNP leaders were arrested Saturday night for allegedly hurling objects at police. It was the third general strike in recent weeks. The chaos has resulted in hundreds being hurt, cars torched, and a continuing string of arrests. As reported last week, the political turmoil has led to at least 20 deaths.

Grameen’s founder, Mohamad Yunus, who created the bank in 1986, condemned the government’s action in the strongest possible language.  “Grameen Bank was created as a bank owned by the poor women, and managed by the poor women,” he said in a Nov. 6 statement. “Its legal structure did not allow any government interference of any kind, except for regulatory oversights. The amendments have fundamentally changed the character of the bank and the government has opened the door for its ultimate destruction. What a shame for the nation, and the whole world!”

“The new act will allow the government to virtually dominate the activities of Grameen bank in all aspects,” said Kamaluddin Ahmed, a Dhaka based political analyst..  “The government would have three members in the board of directors (out of 12), but it will also nominate the chairman. Moreover in selection of the managing director too, the government would have an indirect say.” Speaking to Asia Sentinel from Bangladesh, Ahmed added that by increasing its share from 3 percent to 25 percent, the government emerges as the single-most important shareholder in the bank. It also empowers the government to take major decisions regarding the bank.

“Understanding the implications of the new Grameen act, one can easily guess that it is the end of the Prof, Yunus era in Grameen bank,” Ahmad said. “The act has specified a retirement age of 60 for the managing director and Prof. Yunus is already over 70. So even if we bet for a different government in Dhaka after the national election, he cannot return.”

Finance Minister Abdul Maal Abdul Muhith said that while the new law increases the government’s control over the micro-credit institution, it won’t raise its increment from 25 percent, which it now owns. The government has been steadily raising its increment, from the original 3 percent when the bank was established. Muhith said the law was merely a constitutional requirement because the original ordinance that created the bank during military rule must be ratified by the parliament,

Sheikh Hasina has been tightening the screws on the Grameen Bank for months despite widespread criticism. Since it was established by Yunus in 1976, the bank has grown into arguably the world’s most effective anti-poverty institution, making tiny loans to the poor, mostly women. It now has more than 8 million members and earned Yunus the Nobel Prize in 2006. More than 100 nations have created similar programs – even wealthy ones including the United States.

It apparently also earned Yunus the eternal enmity of Sheikh Hasina, partly because according to sources in Dhaka she felt she should have won the 2006 Nobel Prize, for her role in bringing peace to Bangladesh’s warring hill tribes during her previous stint as prime minister. She has also distrusted him as a possible political force he made an abortive attempt to set up a reform party in the wake of the 2007 state of emergency that temporarily ended constitutional government.

Hasina’s government forced Yunus out of the bank in 2011, alleging that at age 72 he had passed the legal age to run the bank although there was no law mandating an age limit for private bank officials. The Bangladesh Supreme Court upheld the decision nonetheless. Hasina found another opportunity to go after Yunus in 2010 when a Norwegian documentary alleged Grameen Bank was dodging taxes. Yunus denied any financial irregularities and he has since been exonerated.

However, after Yunus  recently added his voice to calls to restore the provision to the Constitution that would turn the government over to a caretaker to conduct the national elections, the country’s tax authority charged him with avoiding taxes on income from awards, book royalties and foreign tours. Yunus’s office denied the allegations, calling them “baseless,” saying Yunus has paid all taxes according to Bangladesh’s laws.