The order to sack him came from the central bank, but Grameen bank legal advisers say his appointment was legal.
Yunus and his microfinance activities have come under fire from the government and sections of the media, who say he and his bank have been exploiting the poor.
“While microcredit has done a lot, there were problems which were recognised in Bangladesh and talked about,” says Shahid-ul Alam from the capital Dhaka. “But this issue was taken without any kind of political appraisal by the West at large.”
Last December a Norwegian documentary accused Yunus of transiting aid cash from Norway into side accounts in various banks to make money.
He also had a run-in with prime minister Sheikh Hasina after he tried to set up a political party in 2007.
“What is happening now has very little to do with those particular frailties of the Grameen model,” says Alam. “For this suddenly to become a problem would suggest there’s something else afoot.”
Yunus won the Nobel Peace Prize in 2006.