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In India, the gap between the haves and the have-nots is always alarmingly high. Vices like superstition, illiteracy, caste system and the greed of the rich and powerful do not allow the principle of equality to set in. Consequently, India is unable to get rid of poverty and unemployment. It was with the objective of alleviating poverty and generating employment that the role of small finance came into the limelight. The word "micro credit" did not exist before the seventies. Now it has become a buzz-word among the development practitioners. In the process, the word has been imputed to mean everything to everybody. Micro credit creates a huge purchasing power. This, in turn, gives impetus to industrial growth and finally leads to a higher GDP. The contribution of micro credit towards social reforms cannot be overlooked either. Over the past decade, micro finance institutions have adopted innovative ways of providing credit and savings services to the entrepreneurial poor. Several micro finance institutions have succeeded in reaching the poorest of the poor by devising innovative strategies. These include the provision of small loans to poor people, especially in rural areas, at full-cost interest rates, without collateral, that is repayable in frequent installments. Micro finance programmes aimed at the poor women are designed to help them to come out of the clutches of poverty and make a sustainable living. One of the assumptions of the scheme is that loans are the only financing system that can provide sufficient capital to meet the needs of the SHG members. Under this scheme, credit is available for various purposes ranging from urgent consumption needs to accumulation of assets. Also, the credit users are encouraged to initiate small income generating micro-enterprise. It is a fact that self-employment activities bring income, increase consumption levels, lead to a rise in the demand for education of children. This study underlines the impact of microfinance on women resulting in an increase in income and improvement in their standard of living. The present study makes an attempt to analyse the impact of micro-finance aimed at poor and impoverished rural women in particular, using survey data gathered from members of women SHGs functioning in Virudhunagar district of Tamilnadu.