Yunus, Muhammad << YOO nuhs, moo HAM uhd >> (1940-…), a Bangladeshi banker, pioneered the idea of microcredit, in which small loans—typically in sums between $50 and $100—are made to poor people. Yunus won the Nobel Peace Prize in 2006 along with the microcredit bank he founded, the Grameen Bank.
Yunus established the Grameen Bank in 1976 to offer microcredit as a means of reducing poverty in Bangladesh. Ordinarily, when a bank loans money, it requires the borrower to offer certain property as collateral. The borrower agrees that this property, such as a car or a piece of land, will be given to the bank if the borrower cannot repay the loan. Yunus devised a system for poor people unable to provide collateral for loans.
Under Yunus’s system, members of a community are divided into groups of five people. Only two members of the group may have a loan at a time, and that loan must be partially repaid before another member of the group can borrow. Borrowers repay their loans in small weekly installments. The bank encourages the members of the groups to become active in social, educational, and health matters in their communities. Grameen offers other financial services, including savings, insurance, and housing loans.
Through the years, Grameen’s rate of repayment on its collateral-free loans has remained above 98 percent, a rate comparable to that of traditional banks. Since its founding, Grameen Bank has given loans totaling over $5 billion to more than 5 million Bangladeshis, with women making up more than 95 percent of the borrowers. The Grameen philosophy has become international through the Grameen Foundation, which offers microcredit to the poor in more than 20 nations today.
In 2011, the government of Bangladesh forced Yunus out of his position with the Grameen Bank. Yunus had angered the Bangladeshi prime minister by forming his own political party for a brief time in 2007. Yunus continues to write and speak on microcredit as a way to reduce international poverty.
Sheikh Hasina Wajed, who became prime minister of Bangladesh in 2009, resigned in August 2024. Her resignation followed weeks of antigovernment protests. The president of Bangladesh then dissolved the national Parliament and named Yunus to lead an interim (temporary) government as its chief adviser.
Yunus was born on June 28, 1940, in Chittagong, Bangladesh. He received a bachelor’s and a master’s degree from the University of Dhaka. In 1969, he earned a doctorate in economics from Vanderbilt University in the United States. Yunus taught economics at several universities, including Middle Tennessee State University and the University of Chittagong, before leaving teaching to found the Grameen Bank.
See also Microfinance.
