Muhammad Yunus (File Photo)

Xinhua, October 13, 2006

Stockholm, Sweden -- Bangladeshi Muhammad Yunus and his bank, the Grameen Bank, won the Nobel Peace Prize on Friday for creating microcredit system that has helped millions of poor people in his homeland.

News reaching here from Oslo, the capital of Norway, cited the Nobel Committee as saying that the economist and his bank helped "create economic and social development from below" in Bangladesh.

"Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means," said the Nobel Committee.

Yunus, 66, set up the Grameen Bank in 1976 to give credit to the very poorest in his country, particularly women, in order to let them set up tiny businesses without collateral.

The microcredit system is the extension of small loans to entrepreneurs too poor to qualify for traditional bank loans.

"In Bangladesh, where nothing works and there's no electricity," Yunus said, "microcredit works like clockwork."

"Yunus has, first and foremost through Grameen Bank, developed microcredit into an ever more important instrument in the struggle against poverty," the committee said.

Yunus and the Grameen Bank have shown that women could get rid of poverty by taking tiny loans to start or expand tiny businesses.

"Economic growth and political democracy can not achieve their full potential unless the female half of humanity participates on an equal footing with the male," the committee added.

Yunus told Norway's NRK public television by telephone that he was "delighted, really delighted," adding that "you are endorsing a dream to achieve a poverty-free world."

The peace prize was the sixth and last Nobel prize announced this year. Yunus and the bank will share the prize of 10 million kronor (1.4 million U.S. dollars).