Microfinance refers to a variety of affordable financial services that target low-income clients, living either on or below the poverty line, particularly women. It aims to empower these clients by providing them access to microcredit for income-generating activities, savings and insurance, and remittance services.
A Microfinance Institution (MFI) is an organisation that provides microfinance services such as microcredit and insurance services targeted to the poor. All MFIs share the common characteristic of providing these services to a clientele who are otherwise excluded from formal financial services.
Financial inclusion or inclusive financing refers to delivering financial services at affordable costs to sections of disadvantaged and low-income households in society who are otherwise unable to avail formal financial services.
As rural women are more subjugated to discrimination, microfinance aims to improve their status within the family and community by giving them access to financial services. Women availing microfinance activities tend to be more assertive, confident, own more assets and play a stronger role in decision-making.
At the end of 2018-19, the microfinance industry in India had a total of 3.17 crore clients with a gross loan portfolio of 68,207 crores. The industry itself had grown by 47% over the past year.