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utting too much emphasis on profit is probably the most fundamental flaw in the world’s banking system, leading banks to neglect their main function of providing credit access to the public, microfinance expert and Nobel laureate Muhammad Yunus says.

“I see that there is something wrong with our banking system: Banks lend to people who have lots of money. That’s wrong, they should lend to people who do not have the money,” he told a seminar in Jakarta on Wednesday.

Yunus, the founder of the pioneering Bangladeshi microcredit Grameen Bank, said that such a situation would prevent lower-income people from having more access to financing, which was necessary for them to get out of the cycle of poverty.

“Poverty is not created by poor people, it is created by the system all around us. If you want to remove poverty, you need to look at the system as a whole and ask what’s wrong,” he added.

The Bangladesh-born economics professor received a Nobel Peace Prize in 2006 for his work in providing microcredit through Grameen Bank, which he founded in 1983 as a financing alternative to high-interest loans from loan sharks for the poor in his country.

Unlike conventional banks, Grameen Bank’s business approach focuses on poor people, who are allowed to take loans with no collateral required.

As of October 2011, Grameen Bank had 8 million borrowers, 97 percent of whom were women. It boasted 2,565 branches that covered more than 97 percent of all villages in Bangladesh, according to the lender’s official website.

Grameen Bank turned heads in the banking world following the success of its branch in New York, the United States, which it opened in 2009. The branch managed to issue US$1.5 million in small loans in the first year of its operations with a repayment rate of more than 99 percent.

Yunus argued that the success of Grameen Bank in New York was proof that the business model of his bank, dubbed a “social business”, could be replicated by banks or governments in other countries as it was both profitable and sustainable.

Besides, there remained a huge untapped market in the banking segment as there were many low-income citizens still needing access to credit at the moment, he added.