Microfinance involves providing small loans, savings opportunities, and other basic financial services to low-income individuals. It began in the 1970s with programs loaning small amounts to groups of poor women for business purposes. These programs found that poor people without collateral could repay loans at high rates when given the opportunity. In India, microfinance has been practiced informally for ages and various government policies and programs have aimed to promote access to rural credit, though currently only 5% of rural poor have access to microfinance due to high costs, unfavorable policies, and other barriers. Major microfinance institutions operating in India are listed.

2. Micro Finance is the supply of loans,
savings, and other basic financial service to
the poor .
Micro finance means providing very poor
families with very small loans (micro
credit) to help them engage in productive
activities or grow their tiny businesses .

3. The modern micro finance movement dates back to the 1970s
when experimental programs in Bangladesh, Brazil, and a few
other countries began to extend tiny loans to groups of poor
women to invest in micro enterprises .
By lending to groups of women where every member of the
group guaranteed the repayment of all members, these micro
credit programs challenged the prevailing conventional wisdom
and proved that poor people without collateral could be "credit
worthy". When offered the opportunity, they would repay loans
with interest, at extraordinary rates of repayment.

4. Evaluation of Micro finance in India :
Micro finance has been in practice for ages ( though
informally).
Legal framework for establishing the co-operative
movement set up in 1904.
Reserve Bank of India Act, 1934 provided for the
establishment of the Agricultural Credit Department.
Nationalization of banks in 1969.
Regional Rural Banks created in 1975.
Established as an apex agency for rural finance in 1982.
Passing of Mutually Aided Co-op. Act in AP in 1995.

6. Below Poverty Line 350 million people
Household 75 million
Annual credit demand 60,000 corores
Cumulative disbursements 5000 carores
Total Outstanding 1600 carores
5% of Rural poor have access to micro finance

7. Bankers feel that it is full risks and uncertainties.
High transaction costs.
Unfavourable policies.
Lack of an appropriate legal vehicle.
Limited access to equity.
Difficulty in accessing low cost on lending funds.

9. SKS Microfinance Ltd (SKSMPL)
Spandana Sphoorty Financial Ltd (SSFL)
Share Microfin Limited (SML)
Asmitha Microfin Ltd (AML)
Shri Kshetra Dharmasthala Rural Development Project(SKDRDP)
Bhartiya Samruddhi Finance Limited (BSFL)
Bandhan Society
Cashpor Micro Credit (CMC)
Grama Vidiyal Micro Finance Pvt Ltd (GVMFL)
Grameen FinancialServices Pvt Ltd (GFSPL)