He lent $27 to 42 villagers in Bangladesh and started a bank for the poor.
Muhammad Yunus was born on June 28, 1940, in Chittagong, in what was then British India and is now Bangladesh.1 He studied economics at Dhaka University, received a Fulbright scholarship to Vanderbilt University, and earned his doctorate in 1969. He returned to Bangladesh to teach economics at Chittagong University.
In 1976, during a visit to the village of Jobra near the university, Yunus discovered that 42 villagers had collectively borrowed a total of approximately $27 from local moneylenders at usurious rates. The small size of the debt struck him. He lent the money himself and found that the borrowers repaid in full.2
From this experiment, Yunus founded the Grameen Bank in 1983, a microfinance institution that extended small loans to the rural poor, primarily women, without requiring collateral.3
By the 2000s, Grameen Bank had lent more than $6 billion to over 7 million borrowers, 97 percent of them women. Repayment rates consistently exceeded 95 percent.4 In 2006, Yunus and Grameen Bank shared the Nobel Peace Prize.5
The microfinance model Yunus pioneered spread to more than 100 countries. It also attracted criticism. Scholars questioned whether microloans lifted borrowers out of poverty or merely managed their survival within it. In 2011, the Bangladeshi government removed Yunus from his position as managing director of Grameen Bank, citing age limits, in a move widely interpreted as politically motivated.6