Muhammad Yunus's Micro-credit idea has not gone uncontested. Some economists have reservations about micro-credit being an effective economic tool for fighting poverty; they believe the idea is in danger of being oversold. According to others, there are many defects inherent in the Grameen concept.

Critics also say that the image of micro-finance has been close to charity and much of its business has been conducted by non-profit organisations, which fail to be the part of the wider financial system. To them, in the long term, such organizations will lack resources for optimal growth.

The Wall Street Journal reports that the profits of the bank fell 85% between 1993 and 2000 because of a fall in the bank's loan repayment rate and the increased competition it has been facing from other agencies that were also offering loans. Professor Yunus, of course, has rejected the claim, saying that, on the contrary, financially, the Grameen Bank was in its "strongest position ever" during the period.

Yunus's adversaries argue it is not possible for traditional commercial banks to become involved in microcredit, which is a very small-scale finance. The reason: operating a large number of small loans or accounts will increase the unit costs of administration. Besides, the commercial banks may find it a difficult and an expensive task to acquire deep knowledge of the communities they are serving (which is an important part of microfinance). Commercial banks are also frequently subject to interest rates regulations.

Some critics point out that Grameen often puts the poor borrowers indirectly under tremendous pressure to repay the money they owe even when times are extremely tough for the borrowers. This is because the loan is given to a group and all the people in the group are held liable for any member's default. Moreover, loan recovery in some cases has allegedly been done by using unkind methods.

Another argument against is since micro-finance is mostly targeted at women, it fails to involve both genders substantially, when involvement of both genders is important for poverty alleviation and economic development of a country.

Yet another argument is that the majority of the poor want a steady wage-employment and do not prefer to become self-employed. Through micro-credits debts get recycled because people borrow at subsidized rates to repay older loans, thus making the income effect negligible. Micro-credit benefits the slightly better off more and does more harm than good to the poorest. Critics doubt whether micro-credit institutions, which primarily rest on subsidies, can ever become financially self-sustaining.

But Yunus's Grameen is a success story; its appeal is ever more increasing. More and more financial institutes round the world are looking into getting involved in micro-finance. The ICICI Bank in India entered the microfinance market in 2001, increasing its portfolio from $16m to $63m in two years.