Microfinance – Way forward for Financial Inclusion.

Microfinance is generally defined as specialized financial tools - such as small loans, savings accounts and insurance policies - available to poor households and small businesses that do not typically have access to financial services.

Inclusive financial services are now recognized as one way to empower individuals and communities to lift themselves out of poverty. As has been demonstrated since the first experiments with microfinance, many people living in poverty can improve their livelihoods when given the opportunity to save, invest, and insure.

It is estimated that there are now over 10,000 microfinance institutions (MFIs) operating throughout the world. The spectrum of organizations involved in microfinance is vast: most are small local NGOs, but an increasing number of international organizations, credit unions, government agencies, banks, charities, and the world's largest private financial institutions are now providing or helping to provide microfinance products.

Microfinance means more than giving out small loans. Although loans are one of the most important services offered by MFIs, there are many other services under the umbrella of microfinance. Microloans are typically smaller than the loans offered by banks in the developed world. But even a few hundred Rupees can often allow a small business in a rural village get off the ground.