Bangladesh’s Nobel laureate Muhammad Yunus has been asked to head the interim government in the wake of the political crisis that saw Prime Minister Sheikh Hasina flee the country on Monday.

Yunus, 84, who hailed the weeks-long student-led protests that brought down the Hasina government as a “Second Victory Day”, has been a critic of Hasina’s 15 years of iron-fisted rule.

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The protests began against a job quota, which reserved more than half the posts to particular groups including one-third for the descendants of 1971 war veterans. It was scaled back by the Supreme Court on July 21, but it did not assuage the protesters.

“This is our beautiful country with lots of exciting possibilities. We must protect and make it a wonderful country for us and for our future generations,” Yunus told reporters.

The economist and entrepreneur takes over the reins of the country after one the deadliest protests in its history, which saw more than 300 killed and thousands arrested. Big challenges lie ahead as he has to establish law and order, revive the economy, and pave the way for free and fair elections.

Ahmed Ahsan, a former World Bank economist and a director of the Policy Research Institute in Bangladesh, says Yunus “is the man of the hour, chosen by the students who spearheaded the entire movement”.

“He commands enormous respect both in the country and in the world,” Ahsan told Al Jazeera.

‘Banker to the poor’

Yunus, the third of nine children, was born in 1940 in a village near the southern port city of Chittagong in what was then East Pakistan.

He graduated from the University of Dhaka in 1961. He joined Vanderbilt University in the United States in 1965 on a Fulbright scholarship for his PhD in economics, which he completed in 1969. He went on to become an assistant professor at Middle Tennessee State University in Murfreesboro, Tennessee in the US.

During the 1971 liberation war against the Pakistani military, Yunus supported efforts to create an independent Bangladesh. He founded a citizens’ committee in the US city of Nashville and helped run the Bangladesh Information Center in Washington, DC, which lobbied the US Congress to stop military aid to Pakistan.

In 1972, Yunus returned to an independent Bangladesh, and after a brief spell in the country’s new Planning Commission, joined the economics department of the University of Chittagong.

The protests began against a job quota that reserved more than half the posts to particular groups including one-third for the descendants of 1971 war veterans [Mohammad Ponir Hossain/Reuters]

In 1976, he visited nearby villages in Chittagong that were affected by famines a few years earlier as part of his field work at the university. Yunus lent 42 people in the village $27 and found that each of them paid the money back as scheduled.

He found out that small loans or microcredits given to poor villagers made a huge difference. Traditional banks would not lend them money, forcing them to rely on unscrupulous money lenders who charged exorbitant interest rates.

This was the beginning of Grameen Bank (village bank) which pioneered the provision of microcredit to poor people to allow them to start up new businesses. Yunus became known as the “banker to the poor” as he helped lift millions out of poverty through his Grameen Bank.

Awarded the Nobel Prize

In 2006, Yunus and Grameen Bank were together awarded the Nobel Peace Prize for their work to “create economic and social development from below”.

By that time, the bank had lent more than $7bn to over seven million borrowers, 97 percent of them women, with a repayment rate of nearly 100 percent.

“I see poor people are getting out of poverty every day … we can see that we can create a poverty-free world… where the only place we’ll see poverty will be in the museums, poverty museums,” Yunus said at the time.

Yunus is now faced with the rough and tumble of politics beyond the reams of theory.

His immediate task will be to restore stability after five weeks of deadly protests, but the larger issue is the economic crisis that has seen the ballooning of food prices and a stagnant private job sector.

“The new government will need to stabilise the economy and contain inflation … and stabilise exchange rates,” Ahsan from the Policy Research Institute told Al Jazeera.

Jon Danilowicz, a former US diplomat who spent eight years working in Bangladesh, believes that Yunus’s appointment is a good choice as his international profile will help the South Asian nation of 170 million.

“His great strength is his credibility and his profile internationally, particularly in the United States. He can tap into the reservoir of goodwill that exists there and the willingness of the United States to do what it can do to help Bangladesh,” Danilowicz told Al Jazeera.

The former diplomat, who is a board member of a rights NGO based in Bangladesh, thinks there are three big challenges for the interim government: dealing with the economic issues; unravelling the politicisation of the country’s institutions including the civil service, police and judiciary; and how to deal with the issues of accountability for serious human rights violations.

“He must establish civilian control and supremacy early on and make sure that the army goes back to its normal role of supporting the civilian administration,” Danilowicz said.

On the diplomatic front, Yunus will have to strike cordial ties with India, which backed the Hasina administration despite her rights violations and repression of opposition voices. Hasina is currently in India.

“The new government must have cooperative relations with India as a hostile Indian government could be a spoiler, causing problems for Bangladesh,” Danilowicz said.

On Hasina’s target

Yunus became the target of Hasina’s ire after he floated the idea of launching a political party in 2007.

Yunus’s initial idea of launching the party came against the backdrop of the failure of the two main parties – Hasina’s Awami League and the opposition Bangladesh Nationalist Party (BNP) – to address rampant corruption and rising income inequality.

In 2011, Hasina, who perceived the then-71-year-old respected economist as a political threat, removed Yunus from his position as managing director of Grameen Bank, calling him a “bloodsucker” of the poor. Her government subsequently launched financial investigations into his non-profit businesses. Last year, he was convicted for violating labour laws, and he has been subject to an ongoing corruption case that many consider bogus.

The latest protests, which began against government job quotas but morphed into a much larger peoples’ movement, were a sign that the country’s youth, who comprise one-third of the population, sought a new kind of politics with greater democracy and accountability.

Yunus “has been under constant persecution by the previous regime and he could have chosen to leave the country but he never considered that possibility”, Ahsan said.

“He has been willing to stand by his own institution and his country, so clearly he is a patriot.”