Maswood Alam Khan Maryland, USA
Most of the educated, liberal and mostly very pleasant people I met or talked to and the articles I read during the last few days on the recent allegations against Dr Yunus and Grameen Bank told it was unfortunate that of all people Bangladeshi writers, journalists and politicians made scurrilous remarks about a person who made Bangladesh known to the world by his role as ‘a banker to the poor’ and earned a Nobel prize for peace. Only a few who supported the onslaught of abuse on the Grameen Bank, I found out to my chagrin, were those who are afraid of Dr Yunus’s meteoric rise to fame.
Last Sunday, Dr. Muhammad Yunus while speaking at a press conference that was arranged in the Grameen Bank Headquarters in Dhaka said certain quarters and individuals had been showing enthusiasm in fabricating news and misinterpreting the contents aired by the National Norwegian Television, NRK, spreading an impression that he had diverted foreign funds in an irregular manner and embezzled money. Terming such fabrication of fact sad and unfortunate Dr Yunus stated that the “Grameen Bank is a transparent institution”.
One particular point of one of Dr Yunus’s contentions that drew my attention as I could read from the news reports on the press conference, published in different Bangladeshi newspapers, on the question of Grameen Bank’s fund transfer to Grameen Kallyan is:
“Grameen Bank, in Dr Yunus’s language, had committed no wrong by transferring its money to Grameen Kallyan. The transfer was done to protect Grameen Bank from taxation just to reduce the company’s expenses and for the best utilization of the fund to meet the purpose it was donated for. There was nothing in it for evading tax, but only taking the opportunity provided by the government as all other companies do.”
My curiosity on Dr Yunus’s assertion: Should Grameen Bank be equated with a company owned by a Tom, Dick and Harry? More than 80 percent private companies in Bangladesh evade tax in a variety of crude and unethical methods. Those unscrupulous companies sniff around for unholy opportunities such as ‘lending money to a religious or philanthropic organization which is conventionally exempted from paying tax and then borrowing the same money from the recipient of the fund for a commercial purpose to hoodwink the tax authorities so that both the philanthropic organization and the commercial one—both in most cases owned by the same entity—are exempted from paying any tax: one showing the money as grant for charity and the other showing the borrowing as a liability burdened by interest. Such dubious transaction is what is termed by learned chartered accountants as “Lend and Leaseback”.
But Dr Yunus must be honored as a real philanthropist and a true ‘banker to the poor’, very rare to find in our country, if Grameen Kallyan did pay in whole the tax payable to the government for gaining the fund or (if tax in whole was not paid by Grameen Kallyan) if Grameen Bank had lent the ‘Grant’ of US$ 100 million received from the donor agencies as microloans to the poor at no interest, or at best at effective nominal interest of 2 percent to cover the administrative cost, considering the fact that the Grant (if it was interest-free and not ever to be refunded back to the donors) was quite obviously handed to Grameen Bank as a revolving fund with a view to lessening the burden of interest on the shoulders of the poor.
When a bank builds up its funds for lending that are usually collected from depositors or borrowed from a third bank or an agency at a given rate of interest the cost of fund as well as its rate of interest for onward lending is high compared to that derived from a grant as the bank has also to pay interest to depositors or creditors. But when a bank gets a grant, which is interest-free and never to be refunded, the fund is almost cost-free and can easily be invested in onward lending at zero interest rate.
The readership and the audience of the news media would have been immensely relieved to hear from the mouth of Dr Yunus numeric details and breakups with a clear-cut percentile ranking of average profit Grameen Bank makes out of a unit of microloan disbursed and how Grameen Bank did actually evaluate the cost of fund of the $100 million-Grant and during the last 14 years what effective rate of interest was charged on the disbursed microloans derived from the same Grant.
Another point that perhaps circumvented many readers’ attention but somehow touched a chord with me was when in reply to a question on interest rate Dr Yunus said the rate of interest of Grameen Bank is 20 per cent at the highest slab, which, he claimed, was much lower than that of many NGOs. But he didn’t explain whether it was an effective rate of interest or a published rate of interest.
One should bear in mind that there is a huge difference between published rate of interest and its effective rate. A published rate of 20 percent interest rate may settle at 30 to 40 percent effective rate when interest is computed on flat rate basis irrespective of loan installments a borrower pays back periodically. Grameen Bank and other NGOs compute interest on flat rate basis. On the other hand interest computation on diminishing outstanding balance, as is practiced by the state-owned banks, yields lower than the published rate if the borrower pays back periodical installments resulting in diminishing balance in his/her loan outstanding.
It’s a tragedy that the rural poor don’t pay back collateral-free micro-loans taken from state-owned banks as there is not much pressure for loan recovery from those state-owned banks while the same borrowers religiously pay back loans taken from NGOs, thanks to intensive pressure the loan supervisors of NGOs exert on the micro borrowers to pay back their loan installments on weekly basis with a view to benumbing their pains of interest burden through quick recovery in the shortest possible span of time, lest the micro borrowers feel sacred on finding a high figure of loan outstanding at the end of a longer period of repayment schedule, say after month or a year.
Notwithstanding the financial irregularities in Grameen Bank, true or false, Dr Yunus did stand on a very high moral ground when during the press conference he said: “I don’t own a single share of Grameen Bank or any other institution of the Grameen family and I want to make it clear that I get no financial benefit, house, car or anything else from any institution established by me except from the Grameen Bank.”
Does it mean that his close family members, like his wife and kids, also don’t own any share of the Grameen family businesses? If so, we must shower Dr Yunus with tons of kudos. If such is the integrity of the Nobel peace laureate the critics who enthused in their spree of flinging harsh words at Dr Yunus must feel their faces now burning with shame. We now must give Dr Yunus a complete bow of our heads in profound respect.
Unlike the shallow-hearted politicians who have of late been enjoying a sadistic pleasure by suing their rivals in the courts of law in their spree for taking personal and political vengeances, Dr Yunus showed his Himalayan magnanimity when in reply to a question whether he would take legal actions against those who made him controversial he said: ‘I do not want to go that way. What would be the benefit if we keep on quarreling?’
This is key moment for Dr Yunus to prove all the critics wrong and we are confident that he would make a clean breast of everything and make a clean sweep of Grameen family businesses, if there is any minor mistake here and there in the books of account. Dr Yunus must not be afraid of the critics who are sneering at him. These are the mean critics who are rather catapulting Dr Yunus to higher celebrity. These critics are small people; they are envious of Dr Yunus. They are weak and a sneer is their only weapon.
The nation needs a man or a woman of integrity, a man exactly like Dr Yunus who or whose family does not own a single share of any of those famous companies like Grameen Bank or Grameen Phone he had established with his sweat and blood.
Time is high when such a towering personality must take the helm of our leadership when our society is replete with greedy and corrupt elements, when the country is facing an acute leadership crisis, when the nation is veering like a ship without a radar, when we are not finding a statesman who could navigate us with a moral compass always in his hand and also with an iron fist always to beat the inept and the corrupt.