Almost everyone who has studied the history of microcredit agrees that Nobel Prize winner Muhammad Yunus is not the father of this popular development scheme. There are various versions of the story, all of which are likely to be true.

Microcredit was introduced in Pakistan by Akhtar Hameed Khan in the early 1970s; in Bangladesh BRAC began to offer small-scale credit a few years before the idea is said to have struck Yunus. And the Boston-based ACCION International introduced microcredit in Latin America a couple of years before Yunus started the Grameen Bank.

What no one will deny though is that Yunus has been the iconic face of microcredit since the 1980s. He has not only generated an unprecedented level of excitement in the ordinary and not-so ordinary folks about a credit-based rural development scheme but is also the voice behind much of the rhetoric the movement has come to be identified with.

It was Yunus who claimed microcredit would relegate poverty to a museum by the year 2030. It was also Yunus’ Grameen Bank that is associated with the catchphrase ‘the poor always pay back’, and it was none other than Yunus who first proposed that, ‘credit is a basic human right’.

What is surprising is that people listened to him, even when he grandly claimed microcredit would relegate poverty to a museum. The list of people who listened is as good as it gets – it includes the Nobel Peace Prize Committee, the Clintons, members of the US Senate and House of Representatives, the United Nations, the World Bank and a long line of important academicians. There are several theories behind why people paid attention, why it made sense to play up the contributions Yunus claimed microcredit had made in putting a dent on poverty in Bangladesh and elsewhere. But this is not the place for that discussion.

What we do know for sure is that behind the rhetoric and the hoopla things had begun to unravel by the mid-2000s. Academic researchers, especially those from Bangladesh and India had been studying microcredit in earnest and were finding out that the results were not as spectacular as promised. Bengali anthropologists, Amin ur Rahman and Lamia Karim reported that women borrowers in Bangladesh were being pressurised to repay their loans and were threatened with public shaming and ‘house breaking’ in case of delinquency. Research also found that the majority of the loans made out to poor women in Bangladesh were taken from them by their husbands, or if the women refused to take a loan they would be coerced by their men until they did so.

But nothing shook the academic world like the randomised control trials in Andhra Pradesh, India. Researchers from the Massachusetts Institute of Technology (MIT) randomly selected a group of microcredit recipients and compared their experiences to another randomly selected group that was not provided with microcredit. They found that 15 to 18 months after the intervention, there were no significant differences between the two groups in terms of their health, education or women’s empowerment.

A host of other studies, including replications of the randomised control trials in other countries and regions, confirmed that microcredit neither reduced poverty nor did it empower women. Surprisingly though, as microcredit has gone in and out of favour, Yunus continues to be considered too sacred to touch. The voices in his support have become louder with time as Shaikh Hasina’s government continues its attempts to cut him down to size. What is it exactly that Hasina worries about so much?

In a country as small as Bangladesh, at least from a geo-political and economic perspective, Yunus is certainly the Gulliver among Lilliputians. And so is his institution, the Grameen Bank. BRAC, ASA and Grameen, in fact, are often called the ‘big three’ in Bangladesh.

Professor Lamia Karim in her book Microfinance and Its Discontents refers to the NGOs in Bangladesh as a ‘shadow state’ for the economic, social and political power they wield. And Grameen is certainly a giant among giants. It has operations across four continents, including the United States. Inside Bangladesh, the number of Grameen’s microcredit borrowers exceeds 8.4 million. With such numbers Hasina’s government has enough reason to worry, for the memory of Yunus’ attempt at forming his own political party is too recent to be dismissed.

But the question is does Yunus’ rise pose a threat to ordinary Bangladeshis? The answer is complicated for Grameen is an NGO not a profitmaking behemoth, but even the most sacred of institutions can turn a dangerous corner if left unchecked. Yunus’ supporters loudly complain about the Government of Bangladesh’s attempts at gaining control over Grameen and argue that the Bank’s real owners are the poor women of Bangladesh. At the same time, if ownership is a code word for empowerment then what about the damning evidence from scholars such as Rehman and Karim?

A larger concern about Grameen and Yunus is that they are backed by powerful international media and marketing campaigns, which does not bode well for Bangladesh either politically or economically. While microcredit may have improved some lives, most people have realised by now that microcredit is no panacea to poverty or women’s deprivations. To allow such an institution to bypass regulation, economic and social policy at the national and local level is dangerous. And to have powerful foreign interests backing a single NGO in a country as impoverished as Bangladesh, should make ordinary Bengalis uneasy.

In Pakistan’s case, there is no Grameen Bank as such to contend with for our NGOs have not enjoyed the kind of power that they have in Bangladesh. At the same time, our microfinance sector is fast growing into a commercialised industry, which has meant that the social mission of this intervention has been bypassed for the financial interests of its investors. This is mainly a policy, not an industry driven change, which is obvious if you compare the Pakistan Poverty Reduction Strategy Paper-I (PRSP) with PRSP-II.

The earlier document was written in 2003 when microfinance was clearly considered a mechanism for poverty reduction and empowerment, but the latter drafted in 2009, clarified that microfinance was really about expanding the scope of the financial sector rather than a means to achieve the basic objectives of development.

For both Yunus and the Pakistani microfinance sector the lesson is pretty much the same — when the means become more important than the end it is time to do some serious soul searching.

The writer studies the political economy of development and is completing her Phd in public policy later this month from the University of Massachusetts Boston, where she also teaches economic development.”