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Microfinance has been treated as an important tool for economic development. Microfinance lenders offer small loans to aspiring as well as current business owners. These loans assist people in getting access to traditional financing and offer jobs to local communities. The size of microfinance loan may vary from lender to lender. But it plays vital role in economic development through job creation, financial stability and global poverty. Microfinance encompasses the provision of financial services and the management of small amounts of money through a range of products and a system of intermediary functions that are targeted at low income clients. In this paper the authors tries to highlight MFIs and their impact on capacity building of SHGs.

In India, the focus of the financial inclusion at present is confined to ensuring a bare minimum access to a savings bank account without frills to all. Internationally, financial inclusion has been viewed in a much wider perspective. The recent financial crisis has shown that financial innovation can have devastating systemic impact. International standard setters’ and national regulators’ response has been a global concerted effort to overhaul and tighten financial regulations. The need was felt for more innovative, cost effective and easily accessible delivery channel which would take financial services to the nooks and corners of India. The paper attempts to analyze contribution of Indian banking sector as a whole under the supervision and guidelines of RBI in implementing the financial inclusion through ‘No frill accounts’, etc. The objectives of the paper are to study financial inclusion in banking sector, reasons for low inclusion and role of technology in banking services and to assess the performance of the banks.