Dr Yunus removed from GB
FE Report | Thursday, 3 March 2011
FE Report
The Bangladesh Bank (BB) has removed Dr. Muhammad Yunus from the post of Managing Director of Grameen Bank (GB) for his alleged violation of regulations relating to age-limit of job and his appointment process, officials said. The country's central bank sent a letter to the chairman of the specialised bank Wednesday asking him to take necessary action in this connection. "We've removed the Managing Director (MD) due mainly to violation of regulation regarding age-limit," General Manager of the Banking Regulation and Policy Department (BRPD) of BB, KM Abdul Wadood told the FE. The central bank has given approval for appointment of the MD in 1990 as a Continued from page 1 col. 7 regular official fixing the age-limit at 60 years, BB officials said, adding that there was no separate regulations to appoint the MD during the period. They also said the BB approval was made null and void with the Grameen Bank's issuing of regulations for appointment of the MD in 2001. Under the fresh regulations, the post of MD was treated as a contractual official instead of a regular one, the BB officials said, adding that the board concerned has violated the Grameen Bank Ordinance 1983 through issuing the regulations without prior approval of the central bank. "The age-limit was fixed at 60 years, but Dr. Yunus is nearly 70 years old," Mr. Wadood said, adding that the regulations have been amended without prior approval of the central bank. On February 28 last, the central bank sent a letter to the finance ministry saying that Dr. Yunus, who won the Nobel Prize for Peace in 2006 for his work of providing small loans to poor entrepreneurs, should be removed from the Grameen Bank. The central bank has also told the finance ministry that his overstaying as the MD clearly flouted section 14 of the Grameen Bank Ordinance as the Bank did not take prior approval from the central bank, the BB officials said. "There shall be a Managing Director of the Bank who shall be appointed by the Board with the prior approval of the Bangladesh Bank," the Grameen Bank Ordinance said. It also added: "The Managing Director shall be the whole-time officer and the chief executive of the Bank and shall serve under the Bank on such terms and conditions as may be prescribed by regulations." "We've issued the removal order in line with the existing Bank Companies Act sections 44 and 45," another BB official said without elaborating. Terming it a legal issue, the Grameen Bank said that the Bank is taking legal advice. "It is also examining all the legal aspects of the issue," the Bank said in a press statement Wednesday. The statement also said Grameen Bank has been duly complying with all applicable laws. It has also complied with the law in respect of appointment of the MD. "The founder of Grameen Bank Professor Muhammad Yunus is accordingly continuing in his office," the Bank said quoting its legal advisers. Meanwhile, Ministry of Finance (MoF) in a letter, issued on the same day, asked Khondaker Muzammel Huq, chairman, Grameen Bank, to act as per the directives of BB on removal of Dr.Yunus. The Banking and Financial Institution Division under the ministry issued the letter, a top ministry official said. Talking to the FE, Mr. Muzammel said he would soon convene a meeting of board of directors of Grameen Bank to finalise the next course of action. Elaborating, the chairman of Grammen Bank said the immediate task would be to replace Dr. Yunus by a senior-most official of the Bank. Later, a Search Committee will be formed to select a new MD, who must be okayed by the BB. The origin of Grameen Bank can be traced back to 1976 when Muhammad Yunus, head of the Rural Economics Programme at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeting the rural poor. AFP add, the US ambassador in Dhaka, James Moriarty, has pressed the government to treat Yunus with respect and the embassy said Wednesday it was "deeply troubled" by the latest development. "We hope a mutually satisfying compromise can be achieved that will ensure Grameen Bank's autonomy and effectiveness," a statement said. Yunus's problems come at a time when the microfinance industry he pioneered is under threat.
The Bangladesh Bank (BB) has removed Dr. Muhammad Yunus from the post of Managing Director of Grameen Bank (GB) for his alleged violation of regulations relating to age-limit of job and his appointment process, officials said. The country's central bank sent a letter to the chairman of the specialised bank Wednesday asking him to take necessary action in this connection. "We've removed the Managing Director (MD) due mainly to violation of regulation regarding age-limit," General Manager of the Banking Regulation and Policy Department (BRPD) of BB, KM Abdul Wadood told the FE. The central bank has given approval for appointment of the MD in 1990 as a Continued from page 1 col. 7 regular official fixing the age-limit at 60 years, BB officials said, adding that there was no separate regulations to appoint the MD during the period. They also said the BB approval was made null and void with the Grameen Bank's issuing of regulations for appointment of the MD in 2001. Under the fresh regulations, the post of MD was treated as a contractual official instead of a regular one, the BB officials said, adding that the board concerned has violated the Grameen Bank Ordinance 1983 through issuing the regulations without prior approval of the central bank. "The age-limit was fixed at 60 years, but Dr. Yunus is nearly 70 years old," Mr. Wadood said, adding that the regulations have been amended without prior approval of the central bank. On February 28 last, the central bank sent a letter to the finance ministry saying that Dr. Yunus, who won the Nobel Prize for Peace in 2006 for his work of providing small loans to poor entrepreneurs, should be removed from the Grameen Bank. The central bank has also told the finance ministry that his overstaying as the MD clearly flouted section 14 of the Grameen Bank Ordinance as the Bank did not take prior approval from the central bank, the BB officials said. "There shall be a Managing Director of the Bank who shall be appointed by the Board with the prior approval of the Bangladesh Bank," the Grameen Bank Ordinance said. It also added: "The Managing Director shall be the whole-time officer and the chief executive of the Bank and shall serve under the Bank on such terms and conditions as may be prescribed by regulations." "We've issued the removal order in line with the existing Bank Companies Act sections 44 and 45," another BB official said without elaborating. Terming it a legal issue, the Grameen Bank said that the Bank is taking legal advice. "It is also examining all the legal aspects of the issue," the Bank said in a press statement Wednesday. The statement also said Grameen Bank has been duly complying with all applicable laws. It has also complied with the law in respect of appointment of the MD. "The founder of Grameen Bank Professor Muhammad Yunus is accordingly continuing in his office," the Bank said quoting its legal advisers. Meanwhile, Ministry of Finance (MoF) in a letter, issued on the same day, asked Khondaker Muzammel Huq, chairman, Grameen Bank, to act as per the directives of BB on removal of Dr.Yunus. The Banking and Financial Institution Division under the ministry issued the letter, a top ministry official said. Talking to the FE, Mr. Muzammel said he would soon convene a meeting of board of directors of Grameen Bank to finalise the next course of action. Elaborating, the chairman of Grammen Bank said the immediate task would be to replace Dr. Yunus by a senior-most official of the Bank. Later, a Search Committee will be formed to select a new MD, who must be okayed by the BB. The origin of Grameen Bank can be traced back to 1976 when Muhammad Yunus, head of the Rural Economics Programme at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeting the rural poor. AFP add, the US ambassador in Dhaka, James Moriarty, has pressed the government to treat Yunus with respect and the embassy said Wednesday it was "deeply troubled" by the latest development. "We hope a mutually satisfying compromise can be achieved that will ensure Grameen Bank's autonomy and effectiveness," a statement said. Yunus's problems come at a time when the microfinance industry he pioneered is under threat.