Role of Microfinance in Financial Inclusion in India

The purpose of this chapter is to critically evaluate the status of microfinance in India, the types, characteristics, and modes of operation of MFIs. It also highlights the main differences between commercial baking and microfinance institutions and examines the extent to which banks fulfill financial requirements and of whom? This chapter presents a linkage among microfinance institutions, financial inclusion, and economic development on a country. The study reveals that MFIs contribute in the upliftment of the society leading to economic benefit to the country as a whole. It makes the reader realize the importance of microfinance in the economic development of a country which cannot be realized just by uplifting the structured and most sophisticated banking sector. Handholding of the poor and rural population is required in order to accelerate the process of financial inclusion and thereby reaching the goal of economic development.