Ancient Indian Practice of Microfinance and its role in Sustainable Community Development

Abstract: This paper explores the ancient Indian practice of microfinance, its historical roots, and its evolving role in sustainable community development. During the Vedic period, usurers provided loans to rural communities, which served as an early form of microcredit. In contemporary India, microfinance institutions (MFIs) such as SEWA Bank and other organizations have expanded to empower rural communities, especially women, by providing financial inclusion and capital for small businesses. Despite significant progress, rural India remains underserved compared to urban areas in terms of banking infrastructure. By drawing lessons from ancient practices and analyzing modern initiatives, this paper highlights the critical role of microfinance in bridging the rural-urban divide and fostering community development through women’s empowerment, poverty alleviation, and agricultural support.