Yunus: I wanted to give money to people like this woman so that they would be free from the moneylenders to sell their product at the price which the markets gave them -- which was much higher than what the trader was giving them.

NBR: But even then you charged interest.

Yunus: Oh yes ... Definitely, yes.

NBR: And why is that? What was the thinking?

Yunus: I thought if you do things in a businesslike way, then the project can become as big as you want it to because you are earning enough money to cover all your costs. You are not dependent on anybody. You are not dependent on a limited supply of capital. This is business money. Business money is limitless. And then, you can reach out to many more people than you would otherwise do.

NBR: So this is not charity?

Yunus: This is not charity. This is business: business with a social objective, which is to help people get out of poverty. Other banks were not giving loans to these people.

NBR: So how did you get from that first $27 to working with Grameen Bank and expanding this around the globe?

Yunus: The villagers got very excited that I gave them the money. To them, it was like a miracle. Seeing this, a question came to my mind. If you can make so many people so happy with such a small amount of money, why shouldn't you do more of it? Why shouldn't you reach out to many more people? I could do this by linking these people with a bank that could lend them the money. So I went to the bank and proposed that they lend money to the poor people. The bankers almost fell over. They couldn't believe what had been proposed to them. They explained to me that the bank cannot lend money to poor people because these people are not creditworthy. So a long series of debates began with me and the banking system. Finally, I resolved it after about six months by offering myself as a guarantor. I said, 'I will sign the loan papers. I will take the risk, and you give the money.' I got the money and gave it to the people. And luckily for me, all the people paid it back. The banks had been saying that I would never get the money back and would ultimately have to pay it back myself. I said, 'I don't know anything. Let me try it out.' And I tried it, and it worked.

NBR: Has it continued to work?

Yunus: Yes, and we expanded it from village to village. But we still saw that the banks weren't changing their minds even after I had demonstrated that there was no risk to the process, that banks could do better by giving money to poor people, who were paying it back, than to rich people, who were not paying it back.

NBR: Poor people were paying the money back [more reliably] than rich people?

Yunus: Much better than rich people. Because Bangladesh has a tradition of rich people who borrow money from the big banks and hardly pay it back.

NBR: That's pretty startling.

Yunus: Very startling, yes.

NBR: You have said that you loaned primarily to women. Why is that?

Yunus: It has to do with the decision to have a separate bank for the poor people. From the beginning, I had complained about the banking system on two grounds. One complaint was that the banking system was denying financial services to the poor people through certain rules it had set up. The second allegation was that the banking system also was not treating women fairly. If you look at the gender composition of all the borrowers of all the banks in Bangladesh, not even 1% of the borrowers happen to be women. I said this is a very gender-biased organization. So when I began, I wanted to make sure half the borrowers in my program are women so that they are even. I did that. It was not easy because women themselves didn't think that they should borrow money. I had to do a lot of convincing. I encouraged them to believe that they can borrow money and make money. Part of that effort was to overcome fears -- cultural fears -- and the fact that they had never had any experience with business and so on. Soon we saw that money going to women brought much more benefit to the family than money going to the men. So we changed our policy and gave a high priority to women. As a result, now 96% of our four million borrowers in Grameen Bank are women.

NBR: So you say you have four million borrowers. How much money over time have you loaned out? Yunus: If we start with that $27, and you add on all the money that we have loaned, it's nearly $5 billion that we have given over time. Now we have come to a stage where every two years we are giving $1 billion. So half a billion dollars a year. That's the stage we are in.

NBR: And this keeps funding itself because of the interest that's being paid?

Yunus: That's right. We take the deposits and we offer the depositors good interest rates. The money we lend to the borrowers makes a profit for the bank.

NBR: While people say that your program works well, some also say that it tends to focus on the top tier of poor people. How do you respond to that -- the criticism that it doesn't get to the people who really need such basic things as food and shelter?

Yunus: Grameen Bank helps poor people of all classes, of all types. Bottom, middle, and higher levels. Our work started with $27 to 42 people. Although we say we can work with all levels, and Grameen Bank is an example, still people don't pay attention to what we do. They just say, 'Oh no. Microcredit. It's not doing the right thing, focusing only on the upper level of poor people.' So last year we started to focus on the beggars. Our argument is you can't be poorer than beggars. That's the last stage of your survival. You go around and beg for food, collect rice, cook it at home and then eat. That's your daily survival ration. So we are interested in them. We are saying, 'Look, as you go house to house, would you carry some merchandise with you -- some cookies, candies, toys for the kids and so on ? to sell?' People love that. We thought initially we would have 4,000 to 5,000 borrowers in that program, but as the year ended we had more than 26,000 beggars. They are very happy because they have seen that when they go to houses which have never opened their front door to them, that door is now open. The beggars show their merchandise and they are given a stool to sit on, which they never had before. The beggars not only sell but also get respect from the families.

NBR: We have recently seen elections in Iraq for the first time. Self determination is the hope there. In a sense, is that what your program does? It changes people?

Yunus: Definitely. Actually, if you look at it one way, the microcredit we give to the women is a tool to explore one's self, how much capacity that is stored up inside: 'I never knew that I had the capacity. That creativity. That ingenuity. To make money to express myself. So that money gives, for the first time, an occasion for me to find out how much I can do.' When you were successful in the first round, when you took tiny amounts -- $30, $35 -- and went into business and paid back the loan, you are now much more equipped to do better. Bigger. So you ask for a $50 loan, a $60 loan, because you think you can do bigger business and more challenging business than when you first took out an easy loan.

NBR: It gives you that self confidence.

Yunus: That self confidence. And if you go through 10 rounds and 15 rounds you are ready for a much bigger challenge than you thought. We introduced information technology into the system. We created a cell phone company called Grameen Phone and brought the phone into the villages of Bangladesh. We gave loans to the borrowers to buy a cell phone and start selling phone service. It became a growing business. Now that they are already confident business women, they can very easily come into a business which they never heard of before. They never saw a telephone in their life but they accepted it as a business idea, and there are now more than 100,000 telephone ladies all over Bangladesh doing good business and connecting Bangladesh with the rest of the world.

NBR: Do they use the telephone in their business, or is this a business itself?

Yunus: It's a business itself. If I have a phone, since nobody else has a phone, they have to come to me to use it. They make a call and pay. It's like a public telephone call office. The owner of the phone becomes a one-person public phone office.

NBR: So it's the newest technology for people who have never had a telephone or anything like that.

Yunus: That's right. People complain that microcredit will let these women raise only chickens and cows and nothing else, that they are always stuck with primitive technology and don't have the capacity to move up to a new technology. So this is again a demonstration