THE DECISION of Nobel laureate Mohammad Yunus to give in to government pressure and step down from the Grameen Bank should not be seen as a victory for opponents of microfinance. Mr. Yunus is the victim of a mean- spirited campaign, and of the complicated internal politics of Bangladesh. He resigned as the bank’s managing director, as he said in a statement this week, to prevent more damage being done to the bank he founded 34 years ago, and to its 8.3 million customers. The Bangladeshi government moved against Mr. Yunus on the grounds of corruption, accusing him of spending years “sucking the blood of the poor.” However, the facts do not support that conclusion. Microfinance, which offers small loans to poor people who lack access to formal financial institutions, has proven to be an effective poverty-alleviation tool, despite recent criticisms of usury. Interest rates are high because of the high cost of collecting payments on millions of tiny loans. The Grameen Bank, which has lent $10.3- billion since its founding, boasts a 97- per-cent loan-recovery rate. Most of the borrowers are women. The Bangladeshi government may well be resentful of the bank’s prestige and influence, and of Mr. Yunus’s abortive attempt to establish a political party in 2007. In India, the government has cracked down on micro-lenders in the state of Andhra Pradesh, following the suicide of several borrowers who became overly indebted after seeking loans from multiple micro-creditors. As the industry develops, more regulations and checks and balances may be needed. However, reforms and new regulatory frameworks are possible without vilifying the industry’s dedicated founder. Unless the Bangladeshi government knows something it has not yet made public, Mr. Yunus, who will continue fighting unproven allegations against him through the courts, will survive this crisis, reputation intact.
