He’s known as the humble banker who helps poor women – so why does the Bangladeshi government have it in for Muhammad Yunus? The pioneer of microcredit – very small loans that allow disadvantaged people to invest and raise themselves from poverty – has been the target of increasingly brutal government attacks in the last two years.

Is he a "blood-sucking, yogurt-contaminating" bad guy – or is something else going on here?

What a clean $100 can do

Muhammad Yunus's Grameen Bank in Bangladesh became an independent bank in 1983 that provides small loans to the poor – typically women – who traditional banks wouldn’t touch, but whom unscrupulous local loan sharks were targeting. He thought that if women had access to reliable, affordable credit – typically $100 or less – they could invest in their small household businesses, lift themselves out of poverty, and repay the loan.

It worked. Today, Grameen Bank has almost 9 million members in Bangladesh who are together majority bank owners, and Yunus is known all over the world as the pioneer of microfinance. In 2006 he was awarded the 2006 Nobel peace prize for his work.

Although microfinance has come under increasing scrutiny in recent years, the best evidence suggests it provides a way out of poverty for at least some borrowers – and Grameen’s nonprofit, member-controlled model remains a world leader.

What a dirty government has done

But neither the medal, nor high-profile backers like US secretary of state Hillary Clinton, have proved powerful enough to defend him from attack in Bangladesh. Here’s what’s gone down:

December 2010: the government claims that Yunus has resigned from the bank. He hasn’t.

March 2011: a government-appointed bank chairman claims Yunus has resigned. He hasn’t (if it doesn’t work once, try again).

May 2011: the government gives Yunus the boot, citing a mandatory retirement age of 60 (Yunus is now 71). Government finance minister Abul Maal Abdul Muhith, hangman-in-chief, is himself 77.

August 2012: the government approves a proposal to give their chairman the right to appoint the bank’s managing director, instead of the board of directors – a majority of whom are female member-borrowers loyal to Yunus.

Throughout this process, Yunus has faced a whole raft of other damaging allegations: that he was selling contaminated yogurt, “sucking blood from the poor”, and misusing Norwegian aid money. None have stood up to serious scrutiny.

During this time, also, the government has made a naked grab for a large network of related but independent Grameen businesses, which include a textile manufacturer and the country’s largest mobile phone company. Many of these companies have pioneered new ways to address poverty – for example, the nonprofit Grameen Telecom has worked with the bank to launch Village Phone, a phone-hire scheme in rural Bangladesh.

In short, the government wants to see these businesses controlled by the bank – and the bank by the government.

Behind the emperor's clothes

What has the government got against Yunus? Part of it may be personal. In 2007, he briefly suggested he might set up a rival political party to "cleanse the polity of massive corruption." Bangladeshi prime minister Sheikh Hasina saw the move – at a time when a temporary military government had her under house arrest – as a personal attack in collusion with the army. Hasina was reportedly also angered when Yunus took the Nobel peace prize six months earlier, because she saw herself as a potential winner after signing a peace agreement in 1997 that ended a brutal internal conflict.

But it’s power, more than personal animosity, that explains the latest attacks on the bank. The assets of the Grameen business network are worth an estimated $1.6bn. In stark contrast to the clear model of community accountability that Grameen Bank has pioneered, the Bangladeshi government’s record is muddy, and corruption is rife. Now, many fear the government will use Grameen for political purposes, such as forgiving loans ahead of elections to gain votes.

What's at stake here

If the government's dirty tactics are not stopped, the democratic, member-controlled model of the bank will be suffocated, as will its spirit of innovation. The bank has achieved extraordinary things: it has raised disadvantaged women to positions of real influence in a society that has dramatic inequalities.

The good news is that Bangladesh's government is reliant on foreign aid and cares about its global reputation, so a big enough global outcry could shame the government into backing down. Some big international names are weighing in to defend the bank from this latest attack, but too many world leaders have stayed silent. To force real action, hundreds of thousands of voices are needed to act as life-saving injections of microsupport to save Grameen for good.

Sources: BBC, Fox News, Nobel Prize, Economist, Guardian, New York Times, South Asian Microfinance Network, Foreign Policy, Transparency International, Centre for Global Development