by Lew Harris A Bangladeshi banker who is credited with dramatically improving the living conditions in his homeland will be honored Oct. 25 with the inaugural Vanderbilt Distinguished Alumnus Award. Muhammad Yunus is the founder and managing director of Grameen Bank, an enterprise he began shortly after he received a Ph.D. from Vanderbilt in 197l to address the unmet needs of the landless poor for small loans. Those loans spurred micro-entrepreneurship that has been credited with enabling a third of the bank's borrowers to cross the poverty line. His approach has been emulated by other banks in Bangladesh and in 52 other countries, including the United States. Yunus, whose doctorate is in economics, will receive the award from the Vanderbilt Alumni Association during a dinner at the Loews Vanderbilt Plaza. On Oct. 24 he will speak on "Credit for the Poor" in a 7 p.m. seminar at Underwood Auditorium. The event is co-sponsored by the University Speakers Committee and the Graduate School. The 56-year-old Yunus, who began his studies at Vanderbilt in the Graduate Program in Economic Development in 1965, has received worldwide recognition, including the 1994 World Food Prize awarded to an individual who has improved the world's food supply or access to it. He also received the Care Humanitarian Award. The World Bank has made him head of its advisory committee to propagate his vision nationwide. After returning to Bangladesh in 1972, Yunus became associate professor and chairman of the Department of Economics at Chittagong University. As he traveled from his home to the university each day, he passed peasants, mostly women, working at crafts or in the fields without sufficient tools or machines. On one trip to the village of Jobra, he came across a group of 42 self-employed craft workers who needed only $28 to supply themselves. When a bank official laughed at the request, Yunus provided the money himself and vowed to create a permanent source of money for poor people. That was the beginning of the Grameen-which means "rural"-Bank. The initial success of the Grameen Bank in Jobra in 1976 attracted the interest of the International Fund for Agricultural Development. The Bangladesh central bank matched an IFAD interest-free loan of $3.4 million and commercial banks became involved. From the beginning, the Grameen Bank has concentrated on women borrowers because of Yunus' belief that women's interest in family stability is greater than men's. The bank with its 1,042 branches and 11,000 employees disburses $20 million in loans each month to 1.6 million borrowers. Other banks in Bangladesh using Yunus' concept reach another 1.5 million people. When international replicators are considered, it is estimated that Yunus' concept has benefitted over the years 36 million individuals, including dependents. A key to Yunus' success is the simplicity of the loans. They are for one year at 20 percent simple interest, not compounded. Repayment starts the second week of the loan, which releases the borrower from having to produce a large lump sum at the end of the year and is intended to build self-confidence. Although no collateral is required, the repayment rate is 98 percent. The average loan is $60 and the smallest is $1. Loans have been made for such essentials as a cow, a bullock cart, a bicycle rickshaw, carpentry tools, wheat thrashers, sewing machines and light industrial equipment. Despite his success, Yunus lives and dresses simply and earns only about the equivalent of $260 a month. He does not own a car and, although he was recently persuaded to get a credit card for hotel bookings, he has actually never charged anything. His approach to lending has attracted the interest of Queen Sophie of Spain, who visited him recently, and of President Clinton. During a trip to Bangladesh last year, Hillary Clinton accompanied Yunus on a visit to some of his borrowers. Posted 10/21/96 at 10:00 a.m.