Muhammad Yunus works to a simple philosophy. He looks at the way in which conventional banks work and then does the opposite: “They go to the rich, I go to the poor. They go to men, I go to women. They go to the urban areas, I go to the rural ones. They look for collateral, I look for collateral-free.”

For Dr Yunus, founder and managing director of Grameen Bank, social objectives are at the heart of any microfinance bank. Small loans are offered to the poorest members of society who find themselves excluded from the financial sector and reliant on loan sharks. Microfinance loans are offered to women to allow their households to start new businesses, which help to lift them out of poverty. The borrowers and savers own the bank and they operate it.

Yet the microfinance industry has changed considerably since Dr Yunus made his first loan of $27 in 1976. It is growing quickly, with not all new entrants sharing his social objectives. At the same time, new research into microfinance has raised questions about its benefits, scale and scope to alleviate poverty and the degree to which it empowers women.

Dr Yunus is in the middle of this crossfire, defending on one hand the work of his organisation and on the other extolling the virtues of his social objectives and criticising those organisations that use the microfinance tag as a marketing exercise for their profit-making businesses.

He is in London this week for the Leaders in London event, where he will speak about nonconventional thinking and how to use it to create markets. He also wants to tell people that microfinance is not “a market for money-making opportunities”; it is an opportunity for breakthroughs into problems “like poverty and women’s status”.

He does not rule out commercial banks’ involvement in microfinance, but emphasises the need to meet his definition – that it targets the poorest people, does not require collateral and supports self-employment. He also argues that commercial banks would need to create subsidiaries that are separate from their main business and staffed with employees “who go out to people and who don’t sit behind desks – poor people don’t come to you”.

Dr Yunus has a Nobel Peace Prize and 25 honorary degrees – but his work is not without criticism. It has been suggested that some women are put under pressure to take loans by husbands and then are burdened with the repayment of the loan. Dr Yunus argues that the woman represents the family and that loans can be made on behalf of anyone in the family unit. He also dismisses claims that the loan mechanism creates tension between those that are in schemes and those that are not. He suggests that there are 20 per cent of poor households in Bangladesh that do not have access to his loans but expects to have near 100 per cent coverage by 2012.

Questions have been asked about his organisation’s involvement with commercial organisations, such as Telenor, the Norwegian telecommunications group, with which he has set up Grameenphone, now the largest mobile operator in Bangladesh. Critics claim that his social objectives to help the poorest are being ignored by his commercial partners. Dr Yunus declined to answer questions on this subject.

Dr Yunus is one of the few bankers in the world who is optimistic about the future: “The Grameen Bank and micro-credit all over the world is still very sound financially, it works beautifully, [with] repayments near 100 per cent, so this is another way to defy convention.”

Muhammad Yunus

Born: June 28, 1940, Bathua, Chittagong district, Bangladesh

Education: PhD in Economics, Vanderbilt University, Nashville, Tennessee, United States (1970)

Career: 1962-65 Lecturer in Economics, Chittagong College; 1969-72 Assistant Professor of Economics, Middle Tennessee State University; 1972 deputy chief general economics division, Bangladesh Planning Commission; 1972-75 Associate Professor of Economics and Head of the Department of Economics, Chittagong University; 1975-89 Professor of Economics, Chittagong University, and director, rural economics programme, Chittagong; 1976-83 project director, Grameen Bank Project; 1983-present managing director, Grameen Bank; 1996 Cabinet minister (adviser) in caretaker government of Bangladesh

Awards: 75 since 1978, including Nobel Peace Prize in 2006; 29 honorary degrees

Other interests: Wants to build a poverty museum so that future generations do not forget about poverty once it is eradicated

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