WASHINGTON -- Dr. Muhammad Yunus likes to think small, and he wishes more banks would do the same.

Mr. Yunus is the founder of the Grameen Bank in Bangladesh, which specializes in making very small loans to impoverished people.

From a $30 loan out of his own pocket 18 years ago, Mr. Yunus has built a lending institution with 1,000 branches serving more than two million people.

"If we are looking for one single action that will enable the poor to overcome their poverty, I would go for credit," he said.

"Money is power," he added. "I have been trying to make the world accept and treat credit as a basic human right."

Mr. Yunus' efforts to help poor people have earned him worldwide acclaim. He was the inspiration for President Clinton's community development bank legislation, which was enacted this summer to promote lending in underserved areas.

In recognition of his efforts to fight hunger, Mr. Yunus was awarded the 1994 World Food Prize last week by former President Carter.

This year, Grameen Bank will lend about $500 million, with the average loan only $100. Grameen's customers live in poverty, yet 98% of the loans are repaid with interest. Mr. Yunus says that U.S. banks could learn from this example.

"Looking at the total amount of money they write off each year, it would be better if they do business with poor people," said Mr. Yunus. "It is a big market opportunity."

Grameen Bank has been copied by other institutions worldwide, but Mr. Yunus says many bankers still need to change their opinions about lending to the poor. "It is a mind-set. They have the fear of the unknown," Mr. Yunus said.

While he approves the Clinton administration's community development bank bill, Mr. Yunus said it didn't go far enough. Normally soft-spoken, Mr. Yunus becomes passionate when speaking about eradicating poverty.

"If we can come up with a system which allows everybody access to credit while ensuring excellent repayment, I can guarantee you poverty will not last long," he said.

When Mr. Yunus, 54, was growing up, he never dreamed he would be winning awards in Washington.

Born and raised in Chittagong, Bangladesh, Mr. Yunus grew up with seven brothers and two sisters in a comfortable environment. His parents owned a jewelry store, and his family never experienced hunger. Neither of his parents had advanced beyond the eighth grade, but they recognized the importance of education. All of Mr. Yunus' brothers and sisters earned advanced degrees.

Mr. Yunus studied economics in Bangladesh, then earned a doctorate at Vanderbilt University in Nashville. He taught at Middle Tennessee State University in Murfreesboro until 1972, when he returned to teach at Chittagong University after Bangladesh became an independent nation.

"I wanted to help create a better future for Bangladesh. I tried to bring the relevant issues facing the country to the ground level in front of my students," Mr. Yunus said.

In 1974, a devastating famine struck Bangladesh, killing more than one million people.

"It gave me a big jolt," he said. "I couldn't live with teaching elegant economic theories and walking around and seeing people dying. I wanted to learn from people, not from textbooks."

Mr. Yunus began investigating how he could make a difference in the lives of the poor. He discovered that many people needed small amounts of capital but were not being served by local banks.

In 1976, he made a personal loan of $30 to a woman who made bamboo stools. This loan had two elements that became the model for Grameen's loans today: It was to a woman, and a group of 41 friends supported her.

Grameen's loan applicants don't need collateral, but must form a borrowing circle of at least five friends who serve as a built-in support and counsel group. Most of Grameen's loans are for subsistence activities such as buying livestock or planting a crop, and 94% of Grameen's loans are to women.

"Women have a longer vision in changing the life of their family," according to Mr. Yunus. "The children benefit immediately from these loans. A man often has different priorities."

Grameen's efforts have resulted in stunning changes for its borrowers. Almost half of the bank's customers have raised themselves above the poverty line.

"The results have been astounding, but not nearly enough of this is going on in other developing countries," said Robert McNamara, former president of the World Bank.

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