Profile: 'World banker to the poor'

Muhammad Yunus was "really delighted" by the award

Muhammad Yunus is often referred to as "the world's banker to the poor". His life's work has been to prove that the poor are credit-worthy.

His revolutionary Grameen (Village) banking system is estimated to have extended credit to more than seven million of the world's poor, most of them in Bangladesh, one of the poorest nations in the world.

The vast majority of the beneficiaries are women.

Mr Yunus came up with the idea in 1976 while professor of economics at Chittagong University in southern Bangladesh.

The first loans he issued had a value of $27 (£14.50). Their recipients were 42 women from the village of Jobra, near the university.

The women had relied until then on local money-lenders who charged high interest rates. The conventional banking system had been reluctant to give credit to those who were too poor to provide any form of guarantee.

The success of Mr Yunus' scheme exceeded all expectations and has been copied in developing countries around the world.

His "micro-finance" initiative reaches out to people shunned by conventional banking systems - people so poor they have no collateral to guarantee a loan, should they be unable to repay it.

Mr Yunus' has tried to tranform the vicious circle of "low-income, low saving and low investment" into a virtuous circle of "low income, injection of credit, investment, more income, more savings, more investment, more income".

As a result, even beggars have been able to borrow money under his scheme.

Legacy of change

The BBC's Roland Buerk in Dhaka says that Mr Yunus lives a simple life. The Grameen Bank is now majority owned by the rural poor it serves, with a 10% stake held by the Bangladeshi government.

Even beggars can get Grameen loans

Our correspondent says that Mr Yunus has already created a legacy of real social change in Bangladesh.

His work has been widely recognised. In 1999 he was awarded the Indira Gandhi prize for peace, disarmament and development in India.

And it is not just in the developing world that he has had an impact.

Hillary Clinton, wife of former US President Bill Clinton, said in 2000 that Mr Yunus had helped the Clintons introduce micro-credit schemes to some of the poorest communities in Arkansas.

In 2002 a report in the Wall Street Journal said the bank was running into trouble because of increased competition and a fall in the bank's loan repayment rate.

Mr Yunus responded by telling the BBC that the bank was in its "strongest position ever".

"Micro-credit is something which is not going to disappear... because this is a need of the people," he said.

"Whatever name you give it, you have to have those financial facilities coming to them because it is totally unfair... to deny half the population of the world financial services."

Now Mr Yunus hopes that the Nobel peace prize will provide a huge boost to Grameen.

"It's recognition of our movement to ensure the rights of the poor," he told the BBC's Bengali service.

"With this recognition, we expect that the model we have developed will spread across the world."