Micro-Finance as A Tool for Financial Inclusion

Microfinance has assumed immense importance throughout the world in view of its efficiency in creditdispensation, loan repayment and reduction of poverty. The experience world over has proved that hassle freeand repetitive dose of credit is the basic need of the poor which has become the hallmark of microfinance.Several countries like Bangladesh, Indonesia, Philippines, Kenya and Bolivia have implemented microfinanceprogrammes with encouraging results. In the Indian context, the microfinance sector has witnessed anunprecedented growth in the last few years, and has firmly established itself as significant potential contributorin the government’s agenda of “Financial Inclusion”. Financial services for the poor have proved to be apowerful instrument for poverty reduction that enables the poor to build assets, increase incomes, and reducetheir vulnerability to economic stress. Financial inclusion, we mean the delivery of financial services, includingbanking services and credit, at an affordable cost to the vast sections of disadvantaged and low-income groupswho tend to be excluded. The various financial services include access to savings, loans, insurance, paymentsand remittance facilities offered by the formal financial system.