Role of Microfinance Institutions in Economic Development

In a development perspective, microfinancehas evolved into a program for women’s economicempowerment and poverty alleviation. One of themost successful methods for enabling the financialinclusion of the poor is microfinance. Microfinancecompanies in India have played a critical role inexpanding access to financial services for lowincome households, especially women. This hasessentially meant offering no-collateral loans tofinancially underprivileged women, who arefrequently grouped into self-help or joint liabilitygroups. The not-for-profit sector was wheremicrofinance first emerged. The majority ofMicrofinance Institutions (MFIs) that were foundedin the middle of the 1990s were nonprofit charitytrusts and societies. They eventually changed intofor-profit Non-Banking Financial Companies asthey expanded because this was necessary for themto draw risk capital. When social enterprises started