(Fixes typo in 4th para) By Jon Herskovitz SEOUL, Oct 20 (Reuters) - This year's winner of the Nobel Peace Prize said on Friday he would be willing to set up a bank in impoverished North Korea to aid its poor, adding that regional stability is enhanced by eliminating poverty. Bangladeshi economist Muhammad Yunus, who won the prize for his grassroots work to lift millions out of poverty by lending small amounts to the neediest, said his concept called "microcredit" could work in a communist state such as North Korea. "If they would like to have a microcredit programme, I would like to have a banking programme. The leadership is the not the whole story of a nation," Yunus said during a visit to Seoul to accept a separate peace prize. Bangladesh's Dhaka University announced separately on Friday that it was awarding Yunus an honorary doctorate in recognition of his Nobel Prize. Yunus has not received an invitation from North Korea, which ranks near the bottom of most of the world's poverty indices, but other communist states such as China and Cuba have sought his help with microcredit. "If Beijing can take it as a political decision and adopt it as an official policy of the Communist Party of China, I don't see North Koreans would have any problem," Yunus said. NEW KIND OF BANK Yunus, 66, set up a new kind of bank in 1976 in Bangladesh to lend to the impoverished, particularly women, enabling them to start small businesses without collateral. He argues that if a woman sells eggs from five chickens, a loan that allows her to buy 50 chickens will increase her family's wealth and has minimal risk due to her experience and peer pressure from her village to repay the money. His Grameen Bank says it has loaned nearly $6 billion to 6.6 million people and has a recovery rate of nearly 99 percent. Yunus said poverty can lead to "political unrest, economic unrest and desperation, which can be the breeding ground for terrorism". "Poverty is a very important aspect of peace," he said. The microcredit movement is not for the faint of heart and it is certainly not for traditional bankers worried about collateral, risks and legal obligations, he said. "They will be scared to death. How can you lend money like that? They will have sleepless night before they give $50." Yunus wants to use the Nobel Prize as a springboard to get more people interested in the concept of microcredit, a system copied in 100 countries from the United States to Uganda. "The door has been opened widely for me," said the man dubbed the "banker to the poor". He would like to see the poor be given ownership for major infrastructure projects built with overseas aid, instead of having governments take control. The projects will be run by professional managers and the poor will be shareholders who want to see the highest possible returns on their small stakes. "The importance of microcredit is that it is bite-sized." Yunus had obtained his masters degree in economics from Dhaka University in 1961. A Fulbright scholar, he later obtained a Ph.D from Vanderbilt University in the United States.
