Published Paper Details:

Microfinance has become an important tool for boosting rural economic development by offering financial services to low-income households often left out of the formal banking system. Through microcredit, savings, insurance, and financial education programs, microfinance helps poor households engage in productive activities, create jobs, and improve their living conditions. In India, the Self-Help Group (SHG)-Bank Linkage Program and Microfinance Institutions (MFIs) have greatly increased financial inclusion in rural areas. As of March 2024, over 144.22 lakh Self-Help Groups were connected to banks, with savings exceeding INR65,089 crore. More than 83 percent of these groups were made up of women, highlighting the significant role of microfinance in empowering women. This paper looks at how microfinance contributes to rural economic development, with a focus on reducing poverty, generating employment, developing agriculture, promoting entrepreneurship, and enhancing social empowerment. The study also addresses key challenges in the sector and offers policy recommendations for improving its effectiveness.